Correlation Between Kinnevik Investment and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Kinnevik Investment and Westlake Chemical 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 Westlake Chemical 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 Westlake Chemical Corp, you can compare the effects of market volatilities on Kinnevik Investment and Westlake Chemical 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 Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinnevik Investment and Westlake Chemical.
Diversification Opportunities for Kinnevik Investment and Westlake Chemical
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kinnevik and Westlake is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Westlake Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical Corp 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 Westlake Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westlake Chemical Corp has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Westlake Chemical go up and down completely randomly.
Pair Corralation between Kinnevik Investment and Westlake Chemical
Assuming the 90 days trading horizon Kinnevik Investment AB is expected to generate 0.79 times more return on investment than Westlake Chemical. However, Kinnevik Investment AB is 1.26 times less risky than Westlake Chemical. It trades about 0.28 of its potential returns per unit of risk. Westlake Chemical Corp is currently generating about -0.13 per unit of risk. If you would invest 7,344 in Kinnevik Investment AB on September 13, 2024 and sell it today you would earn a total of 675.00 from holding Kinnevik Investment AB or generate 9.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kinnevik Investment AB vs. Westlake Chemical Corp
Performance |
| Timeline |
| Kinnevik Investment |
| Westlake Chemical Corp |
Kinnevik Investment and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinnevik Investment and Westlake Chemical
The main advantage of trading using opposite Kinnevik Investment and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinnevik Investment position performs unexpectedly, Westlake Chemical 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 Westlake Chemical will offset losses from the drop in Westlake Chemical's long position.| Kinnevik Investment vs. Caledonia Mining | Kinnevik Investment vs. Lundin Mining Corp | Kinnevik Investment vs. Coeur Mining | Kinnevik Investment vs. Universal Music Group |
| Westlake Chemical vs. Orient Telecoms | Westlake Chemical vs. Foresight Environmental Infrastructure | Westlake Chemical vs. Zegona Communications Plc | Westlake Chemical vs. Roadside Real Estate |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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