Correlation Between Kinnevik Investment and Merit Group
Can any of the company-specific risk be diversified away by investing in both Kinnevik Investment and Merit Group 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 Merit Group 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 Merit Group PLC, you can compare the effects of market volatilities on Kinnevik Investment and Merit Group 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 Merit Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinnevik Investment and Merit Group.
Diversification Opportunities for Kinnevik Investment and Merit Group
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kinnevik and Merit is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Merit Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Group PLC 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 Merit Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Group PLC has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Merit Group go up and down completely randomly.
Pair Corralation between Kinnevik Investment and Merit Group
Assuming the 90 days trading horizon Kinnevik Investment AB is expected to generate 1.07 times more return on investment than Merit Group. However, Kinnevik Investment is 1.07 times more volatile than Merit Group PLC. It trades about 0.05 of its potential returns per unit of risk. Merit Group PLC is currently generating about -0.26 per unit of risk. If you would invest 7,355 in Kinnevik Investment AB on August 24, 2024 and sell it today you would earn a total of 139.00 from holding Kinnevik Investment AB or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinnevik Investment AB vs. Merit Group PLC
Performance |
| Timeline |
| Kinnevik Investment |
| Merit Group PLC |
Kinnevik Investment and Merit Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinnevik Investment and Merit Group
The main advantage of trading using opposite Kinnevik Investment and Merit Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinnevik Investment position performs unexpectedly, Merit Group 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 Merit Group will offset losses from the drop in Merit Group's long position.| Kinnevik Investment vs. Panther Metals PLC | Kinnevik Investment vs. MTI Wireless Edge | Kinnevik Investment vs. Golden Metal Resources | Kinnevik Investment vs. Systemair AB |
| Merit Group vs. Kinnevik Investment AB | Merit Group vs. Monks Investment Trust | Merit Group vs. Made Tech Group | Merit Group vs. L3Harris Technologies |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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