Correlation Between Volkswagen and Kinnevik Investment
Can any of the company-specific risk be diversified away by investing in both Volkswagen 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 Volkswagen and Kinnevik Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Kinnevik Investment AB, you can compare the effects of market volatilities on Volkswagen 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 Volkswagen with a short position of Kinnevik Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Kinnevik Investment.
Diversification Opportunities for Volkswagen and Kinnevik Investment
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Volkswagen and Kinnevik is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and Volkswagen 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 Volkswagen AG 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 Volkswagen i.e., Volkswagen and Kinnevik Investment go up and down completely randomly.
Pair Corralation between Volkswagen and Kinnevik Investment
Assuming the 90 days trading horizon Volkswagen is expected to generate 1.07 times less return on investment than Kinnevik Investment. But when comparing it to its historical volatility, Volkswagen AG is 1.25 times less risky than Kinnevik Investment. It trades about 0.28 of its potential returns per unit of risk. Kinnevik Investment AB is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 7,456 in Kinnevik Investment AB on October 26, 2024 and sell it today you would earn a total of 571.00 from holding Kinnevik Investment AB or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Volkswagen AG vs. Kinnevik Investment AB
Performance |
| Timeline |
| Volkswagen AG |
| Kinnevik Investment |
Volkswagen and Kinnevik Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Kinnevik Investment
The main advantage of trading using opposite Volkswagen and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen 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.| Volkswagen vs. Prosiebensat 1 Media | Volkswagen vs. Elmos Semiconductor SE | Volkswagen vs. Catalyst Media Group | Volkswagen vs. Taiwan Semiconductor Manufacturing |
| Kinnevik Investment vs. Berkshire Hathaway | Kinnevik Investment vs. Samsung Electronics Co | Kinnevik Investment vs. Samsung Electronics Co | Kinnevik Investment vs. Chocoladefabriken Lindt Spruengli |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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