Correlation Between Kinnevik Investment and Ally Financial

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Can any of the company-specific risk be diversified away by investing in both Kinnevik Investment and Ally Financial 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 Ally Financial 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 Ally Financial, you can compare the effects of market volatilities on Kinnevik Investment and Ally Financial 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 Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinnevik Investment and Ally Financial.

Diversification Opportunities for Kinnevik Investment and Ally Financial

KinnevikAllyDiversified AwayKinnevikAllyDiversified Away100%
0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Kinnevik and Ally is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial 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 Ally Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ally Financial has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Ally Financial go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Ally Financial

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to generate 1.32 times more return on investment than Ally Financial. However, Kinnevik Investment is 1.32 times more volatile than Ally Financial. It trades about 0.21 of its potential returns per unit of risk. Ally Financial is currently generating about -0.01 per unit of risk. If you would invest  8,144  in Kinnevik Investment AB on November 25, 2024 and sell it today you would earn a total of  826.00  from holding Kinnevik Investment AB or generate 10.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Kinnevik Investment AB  vs.  Ally Financial

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -40-30-20-1001020
JavaScript chart by amCharts 3.21.150RH1 0HD0
       Timeline  
Kinnevik Investment 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Kinnevik Investment AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Kinnevik Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb75808590
Ally Financial 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Ally Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ally Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb25303540

Kinnevik Investment and Ally Financial Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.64-4.22-2.81-1.390.01.533.064.586.11 0.020.040.060.080.100.12
JavaScript chart by amCharts 3.21.150RH1 0HD0
       Returns  

Pair Trading with Kinnevik Investment and Ally Financial

The main advantage of trading using opposite Kinnevik Investment and Ally Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinnevik Investment position performs unexpectedly, Ally Financial 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 Ally Financial will offset losses from the drop in Ally Financial's long position.
The idea behind Kinnevik Investment AB and Ally Financial 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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