Correlation Between Argo Group and Kinnevik Investment

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Can any of the company-specific risk be diversified away by investing in both Argo Group 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 Argo Group and Kinnevik Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argo Group Limited and Kinnevik Investment AB, you can compare the effects of market volatilities on Argo Group 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 Argo Group with a short position of Kinnevik Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Group and Kinnevik Investment.

Diversification Opportunities for Argo Group and Kinnevik Investment

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Argo and Kinnevik is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Argo Group Limited and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and Argo Group 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 Argo Group Limited 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 Argo Group i.e., Argo Group and Kinnevik Investment go up and down completely randomly.

Pair Corralation between Argo Group and Kinnevik Investment

Assuming the 90 days trading horizon Argo Group Limited is expected to generate 2.05 times more return on investment than Kinnevik Investment. However, Argo Group is 2.05 times more volatile than Kinnevik Investment AB. It trades about 0.18 of its potential returns per unit of risk. Kinnevik Investment AB is currently generating about 0.23 per unit of risk. If you would invest  450.00  in Argo Group Limited on November 28, 2024 and sell it today you would earn a total of  75.00  from holding Argo Group Limited or generate 16.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.45%
ValuesDaily Returns

Argo Group Limited  vs.  Kinnevik Investment AB

 Performance 
       Timeline  
Argo Group Limited 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Argo Group Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Argo Group unveiled solid returns over the last few months and may actually be approaching a breakup point.
Kinnevik Investment 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Kinnevik Investment AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Kinnevik Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Argo Group and Kinnevik Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Argo Group and Kinnevik Investment

The main advantage of trading using opposite Argo Group and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argo Group 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.
The idea behind Argo Group Limited and Kinnevik Investment AB 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.
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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