Correlation Between Wolters Kluwer and Kinnevik Investment
Can any of the company-specific risk be diversified away by investing in both Wolters Kluwer 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 Wolters Kluwer and Kinnevik Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wolters Kluwer and Kinnevik Investment AB, you can compare the effects of market volatilities on Wolters Kluwer 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 Wolters Kluwer with a short position of Kinnevik Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wolters Kluwer and Kinnevik Investment.
Diversification Opportunities for Wolters Kluwer and Kinnevik Investment
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wolters and Kinnevik is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Wolters Kluwer and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and Wolters Kluwer 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 Wolters Kluwer 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 Wolters Kluwer i.e., Wolters Kluwer and Kinnevik Investment go up and down completely randomly.
Pair Corralation between Wolters Kluwer and Kinnevik Investment
Assuming the 90 days trading horizon Wolters Kluwer is expected to generate 1.21 times less return on investment than Kinnevik Investment. But when comparing it to its historical volatility, Wolters Kluwer is 1.95 times less risky than Kinnevik Investment. It trades about 0.48 of its potential returns per unit of risk. Kinnevik Investment AB is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 7,279 in Kinnevik Investment AB on October 24, 2024 and sell it today you would earn a total of 701.00 from holding Kinnevik Investment AB or generate 9.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wolters Kluwer vs. Kinnevik Investment AB
Performance |
| Timeline |
| Wolters Kluwer |
| Kinnevik Investment |
Wolters Kluwer and Kinnevik Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wolters Kluwer and Kinnevik Investment
The main advantage of trading using opposite Wolters Kluwer and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wolters Kluwer 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.| Wolters Kluwer vs. Kinnevik Investment AB | Wolters Kluwer vs. MTI Wireless Edge | Wolters Kluwer vs. Aeorema Communications Plc | Wolters Kluwer vs. Lindsell Train Investment |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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