Correlation Between Kinnevik Investment and Midsummer
Can any of the company-specific risk be diversified away by investing in both Kinnevik Investment and Midsummer 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 Midsummer 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 Midsummer AB, you can compare the effects of market volatilities on Kinnevik Investment and Midsummer 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 Midsummer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinnevik Investment and Midsummer.
Diversification Opportunities for Kinnevik Investment and Midsummer
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kinnevik and Midsummer is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Midsummer AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midsummer AB 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 Midsummer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midsummer AB has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Midsummer go up and down completely randomly.
Pair Corralation between Kinnevik Investment and Midsummer
Assuming the 90 days trading horizon Kinnevik Investment is expected to generate 8.96 times less return on investment than Midsummer. But when comparing it to its historical volatility, Kinnevik Investment AB is 4.34 times less risky than Midsummer. It trades about 0.19 of its potential returns per unit of risk. Midsummer AB is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 94.00 in Midsummer AB on September 13, 2024 and sell it today you would earn a total of 83.00 from holding Midsummer AB or generate 88.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinnevik Investment AB vs. Midsummer AB
Performance |
| Timeline |
| Kinnevik Investment |
| Midsummer AB |
Kinnevik Investment and Midsummer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinnevik Investment and Midsummer
The main advantage of trading using opposite Kinnevik Investment and Midsummer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinnevik Investment position performs unexpectedly, Midsummer 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 Midsummer will offset losses from the drop in Midsummer's long position.| Kinnevik Investment vs. Catella AB | Kinnevik Investment vs. Catella AB A | Kinnevik Investment vs. KABE Group AB | Kinnevik Investment vs. IAR Systems Group |
| Midsummer vs. COOR Service Management | Midsummer vs. Kinnevik Investment AB | Midsummer vs. SaltX Technology Holding | Midsummer vs. Soder Sportfiske AB |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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