Correlation Between SMA Solar and Kinnevik Investment
Can any of the company-specific risk be diversified away by investing in both SMA Solar 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 SMA Solar and Kinnevik Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Kinnevik Investment AB, you can compare the effects of market volatilities on SMA Solar 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 SMA Solar with a short position of Kinnevik Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Kinnevik Investment.
Diversification Opportunities for SMA Solar and Kinnevik Investment
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SMA and Kinnevik is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and SMA Solar 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 SMA Solar Technology 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 SMA Solar i.e., SMA Solar and Kinnevik Investment go up and down completely randomly.
Pair Corralation between SMA Solar and Kinnevik Investment
Assuming the 90 days trading horizon SMA Solar Technology is expected to under-perform the Kinnevik Investment. In addition to that, SMA Solar is 2.49 times more volatile than Kinnevik Investment AB. It trades about -0.21 of its total potential returns per unit of risk. Kinnevik Investment AB is currently generating about -0.05 per unit of volatility. If you would invest 7,748 in Kinnevik Investment AB on August 29, 2024 and sell it today you would lose (185.00) from holding Kinnevik Investment AB or give up 2.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Kinnevik Investment AB
Performance |
| Timeline |
| SMA Solar Technology |
| Kinnevik Investment |
SMA Solar and Kinnevik Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Kinnevik Investment
The main advantage of trading using opposite SMA Solar and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar 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.| SMA Solar vs. Lendinvest PLC | SMA Solar vs. Neometals | SMA Solar vs. Coor Service Management | SMA Solar vs. Albion Technology General |
| Kinnevik Investment vs. Lendinvest PLC | Kinnevik Investment vs. Neometals | Kinnevik Investment vs. Coor Service Management | Kinnevik Investment vs. Albion Technology General |
Check out your portfolio center.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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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