Correlation Between SolTech Energy and Kinnevik Investment
Can any of the company-specific risk be diversified away by investing in both SolTech Energy 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 SolTech Energy and Kinnevik Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SolTech Energy Sweden and Kinnevik Investment AB, you can compare the effects of market volatilities on SolTech Energy 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 SolTech Energy with a short position of Kinnevik Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolTech Energy and Kinnevik Investment.
Diversification Opportunities for SolTech Energy and Kinnevik Investment
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between SolTech and Kinnevik is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding SolTech Energy Sweden and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and SolTech Energy 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 SolTech Energy Sweden 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 SolTech Energy i.e., SolTech Energy and Kinnevik Investment go up and down completely randomly.
Pair Corralation between SolTech Energy and Kinnevik Investment
Assuming the 90 days trading horizon SolTech Energy Sweden is expected to under-perform the Kinnevik Investment. In addition to that, SolTech Energy is 2.0 times more volatile than Kinnevik Investment AB. It trades about -0.13 of its total potential returns per unit of risk. Kinnevik Investment AB is currently generating about 0.08 per unit of volatility. If you would invest 7,321 in Kinnevik Investment AB on September 12, 2024 and sell it today you would earn a total of 701.00 from holding Kinnevik Investment AB or generate 9.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SolTech Energy Sweden vs. Kinnevik Investment AB
Performance |
| Timeline |
| SolTech Energy Sweden |
| Kinnevik Investment |
SolTech Energy and Kinnevik Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolTech Energy and Kinnevik Investment
The main advantage of trading using opposite SolTech Energy and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolTech Energy 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.| SolTech Energy vs. Sinch AB | SolTech Energy vs. Embracer Group AB | SolTech Energy vs. KABE Group AB | SolTech Energy vs. IAR Systems Group |
| Kinnevik Investment vs. Catella AB | Kinnevik Investment vs. KABE Group AB | Kinnevik Investment vs. IAR Systems Group | Kinnevik Investment vs. Mekonomen 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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