Correlation Between PureTech Health and Kinnevik Investment
Can any of the company-specific risk be diversified away by investing in both PureTech Health 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 PureTech Health and Kinnevik Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PureTech Health plc and Kinnevik Investment AB, you can compare the effects of market volatilities on PureTech Health 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 PureTech Health with a short position of Kinnevik Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureTech Health and Kinnevik Investment.
Diversification Opportunities for PureTech Health and Kinnevik Investment
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PureTech and Kinnevik is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and PureTech Health 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 PureTech Health plc 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 PureTech Health i.e., PureTech Health and Kinnevik Investment go up and down completely randomly.
Pair Corralation between PureTech Health and Kinnevik Investment
Assuming the 90 days trading horizon PureTech Health plc is expected to generate 1.43 times more return on investment than Kinnevik Investment. However, PureTech Health is 1.43 times more volatile than Kinnevik Investment AB. It trades about 0.15 of its potential returns per unit of risk. Kinnevik Investment AB is currently generating about -0.05 per unit of risk. If you would invest 15,240 in PureTech Health plc on August 29, 2024 and sell it today you would earn a total of 1,320 from holding PureTech Health plc or generate 8.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PureTech Health plc vs. Kinnevik Investment AB
Performance |
| Timeline |
| PureTech Health plc |
| Kinnevik Investment |
PureTech Health and Kinnevik Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PureTech Health and Kinnevik Investment
The main advantage of trading using opposite PureTech Health and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PureTech Health 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.| PureTech Health vs. Samsung Electronics Co | PureTech Health vs. Samsung Electronics Co | PureTech Health vs. Hyundai Motor | PureTech Health vs. Toyota Motor Corp |
| Kinnevik Investment vs. Lendinvest PLC | Kinnevik Investment vs. Neometals | Kinnevik Investment vs. Coor Service Management | Kinnevik Investment vs. Albion Technology General |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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