Correlation Between Ryanair Holdings and Kinnevik Investment

Can any of the company-specific risk be diversified away by investing in both Ryanair Holdings and Kinnevik Investment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ryanair Holdings and Kinnevik Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ryanair Holdings plc and Kinnevik Investment AB, you can compare the effects of market volatilities on Ryanair Holdings and Kinnevik Investment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ryanair Holdings with a short position of Kinnevik Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryanair Holdings and Kinnevik Investment.

Diversification Opportunities for Ryanair Holdings and Kinnevik Investment

-0.39

Correlation Coefficient

Ryanair Holdings  Kinnevik Investment

Very good diversification

The 3 months correlation between Ryanair and Kinnevik is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and Ryanair Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ryanair Holdings plc are associated (or correlated) with Kinnevik Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinnevik Investment has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Kinnevik Investment go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Kinnevik Investment

Assuming the 90 days trading horizon Ryanair Holdings plc is expected to generate 0.76 times more return on investment than Kinnevik Investment. However, Ryanair Holdings plc is 1.32 times less risky than Kinnevik Investment. It trades about 0.15 of its potential returns per unit of risk. Kinnevik Investment AB is currently generating about -0.05 per unit of risk. If you would invest  137,900  in Ryanair Holdings plc on September 21, 2024 and sell it today you would earn a total of  21,800  from holding Ryanair Holdings plc or generate 15.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Ryanair Holdings plc  vs.  Kinnevik Investment AB

Ryanair Holdings plc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings plc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Ryanair Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Kinnevik Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinnevik Investment AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Ryanair Holdings and Kinnevik Investment

The main advantage of trading using opposite Ryanair Holdings and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryanair Holdings position performs unexpectedly, Kinnevik Investment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kinnevik Investment will offset losses from the drop in Kinnevik Investment's long position.

The idea behind Ryanair Holdings plc and Kinnevik Investment AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.