Correlation Between Kinnevik Investment and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Kinnevik Investment and STMicroelectronics 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 STMicroelectronics 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 STMicroelectronics NV, you can compare the effects of market volatilities on Kinnevik Investment and STMicroelectronics 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 STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinnevik Investment and STMicroelectronics.
Diversification Opportunities for Kinnevik Investment and STMicroelectronics
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kinnevik and STMicroelectronics is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics 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 STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and STMicroelectronics go up and down completely randomly.
Pair Corralation between Kinnevik Investment and STMicroelectronics
Assuming the 90 days trading horizon Kinnevik Investment AB is expected to under-perform the STMicroelectronics. In addition to that, Kinnevik Investment is 1.08 times more volatile than STMicroelectronics NV. It trades about -0.05 of its total potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.03 per unit of volatility. If you would invest 3,560 in STMicroelectronics NV on August 27, 2024 and sell it today you would lose (1,226) from holding STMicroelectronics NV or give up 34.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.81% |
| Values | Daily Returns |
Kinnevik Investment AB vs. STMicroelectronics NV
Performance |
| Timeline |
| Kinnevik Investment |
| STMicroelectronics |
Kinnevik Investment and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinnevik Investment and STMicroelectronics
The main advantage of trading using opposite Kinnevik Investment and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinnevik Investment position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| Kinnevik Investment vs. Samsung Electronics Co | Kinnevik Investment vs. Samsung Electronics Co | Kinnevik Investment vs. Hyundai Motor | Kinnevik Investment vs. Toyota Motor Corp |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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