Correlation Between Kinnevik Investment and Nordea Bank

Can any of the company-specific risk be diversified away by investing in both Kinnevik Investment and Nordea Bank 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 Kinnevik Investment and Nordea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kinnevik Investment AB and Nordea Bank Abp, you can compare the effects of market volatilities on Kinnevik Investment and Nordea Bank 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 Kinnevik Investment with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinnevik Investment and Nordea Bank.

Diversification Opportunities for Kinnevik Investment and Nordea Bank

-0.39

Correlation Coefficient

Kinnevik Investment  Nordea Bank

Very good diversification

The 3 months correlation between Kinnevik and Nordea is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Nordea Bank Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea Bank Abp and Kinnevik Investment 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 Kinnevik Investment AB are associated (or correlated) with Nordea Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea Bank Abp has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Nordea Bank go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Nordea Bank

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to generate 2.11 times more return on investment than Nordea Bank. However, Kinnevik Investment is 2.11 times more volatile than Nordea Bank Abp. It trades about 0.06 of its potential returns per unit of risk. Nordea Bank Abp is currently generating about -0.01 per unit of risk. If you would invest  7,862  in Kinnevik Investment AB on September 12, 2024 and sell it today you would earn a total of  188.00  from holding Kinnevik Investment AB or generate 2.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kinnevik Investment AB  vs.  Nordea Bank Abp

Kinnevik Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinnevik Investment AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Kinnevik Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nordea Bank Abp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nordea Bank Abp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nordea Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kinnevik Investment and Nordea Bank

The main advantage of trading using opposite Kinnevik Investment and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinnevik Investment position performs unexpectedly, Nordea Bank 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 Nordea Bank will offset losses from the drop in Nordea Bank's long position.

The idea behind Kinnevik Investment AB and Nordea Bank Abp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.