Correlation Between Kinnevik Investment and Modern Times
Can any of the company-specific risk be diversified away by investing in both Kinnevik Investment and Modern Times 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 Modern Times 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 Modern Times Group, you can compare the effects of market volatilities on Kinnevik Investment and Modern Times 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 Modern Times. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinnevik Investment and Modern Times.
Diversification Opportunities for Kinnevik Investment and Modern Times
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kinnevik and Modern is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Modern Times Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modern Times Group 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 Modern Times. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modern Times Group has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Modern Times go up and down completely randomly.
Pair Corralation between Kinnevik Investment and Modern Times
Assuming the 90 days trading horizon Kinnevik Investment is expected to generate 26.04 times less return on investment than Modern Times. But when comparing it to its historical volatility, Kinnevik Investment AB is 1.29 times less risky than Modern Times. It trades about 0.02 of its potential returns per unit of risk. Modern Times Group is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 7,600 in Modern Times Group on September 1, 2024 and sell it today you would earn a total of 1,600 from holding Modern Times Group or generate 21.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kinnevik Investment AB vs. Modern Times Group
Performance |
| Timeline |
| Kinnevik Investment |
| Modern Times Group |
Kinnevik Investment and Modern Times Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinnevik Investment and Modern Times
The main advantage of trading using opposite Kinnevik Investment and Modern Times positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinnevik Investment position performs unexpectedly, Modern Times 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 Modern Times will offset losses from the drop in Modern Times' long position.| Kinnevik Investment vs. Investor AB ser | Kinnevik Investment vs. Investment AB Latour | Kinnevik Investment vs. Industrivarden AB ser | Kinnevik Investment vs. Tele2 AB |
| Modern Times vs. Kinnevik Investment AB | Modern Times vs. Tele2 AB | Modern Times vs. Getinge AB ser | Modern Times vs. Securitas 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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