Correlation Between Berkshire Hathaway and Kinnevik Investment
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway 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 Berkshire Hathaway and Kinnevik Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Kinnevik Investment AB, you can compare the effects of market volatilities on Berkshire Hathaway 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 Berkshire Hathaway with a short position of Kinnevik Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Kinnevik Investment.
Diversification Opportunities for Berkshire Hathaway and Kinnevik Investment
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Berkshire and Kinnevik is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and Berkshire Hathaway 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 Berkshire Hathaway 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 Berkshire Hathaway i.e., Berkshire Hathaway and Kinnevik Investment go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Kinnevik Investment
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 3.56 times less return on investment than Kinnevik Investment. But when comparing it to its historical volatility, Berkshire Hathaway is 1.35 times less risky than Kinnevik Investment. It trades about 0.1 of its potential returns per unit of risk. Kinnevik Investment AB is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 7,784 in Kinnevik Investment AB on November 5, 2024 and sell it today you would earn a total of 1,011 from holding Kinnevik Investment AB or generate 12.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Kinnevik Investment AB
Performance |
| Timeline |
| Berkshire Hathaway |
| Kinnevik Investment |
Berkshire Hathaway and Kinnevik Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Kinnevik Investment
The main advantage of trading using opposite Berkshire Hathaway and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway 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.| Berkshire Hathaway vs. DXC Technology Co | Berkshire Hathaway vs. Universal Music Group | Berkshire Hathaway vs. Allianz Technology Trust | Berkshire Hathaway vs. Software Circle plc |
| Kinnevik Investment vs. Software Circle plc | Kinnevik Investment vs. Vitec Software Group | Kinnevik Investment vs. Solstad Offshore ASA | Kinnevik Investment vs. Zoom Video Communications |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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