Correlation Between Kinnevik Investment and Auto Trader

Can any of the company-specific risk be diversified away by investing in both Kinnevik Investment and Auto Trader 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 Auto Trader 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 Auto Trader Group, you can compare the effects of market volatilities on Kinnevik Investment and Auto Trader 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 Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinnevik Investment and Auto Trader.

Diversification Opportunities for Kinnevik Investment and Auto Trader

0.09

Correlation Coefficient

Kinnevik Investment  Auto Trader

Significant diversification

The 3 months correlation between Kinnevik and Auto is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader 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 Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Auto Trader go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Auto Trader

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to generate 1.2 times more return on investment than Auto Trader. However, Kinnevik Investment is 1.2 times more volatile than Auto Trader Group. It trades about 0.19 of its potential returns per unit of risk. Auto Trader Group is currently generating about 0.04 per unit of risk. If you would invest  7,392  in Kinnevik Investment AB on April 20, 2025 and sell it today you would earn a total of  1,912  from holding Kinnevik Investment AB or generate 25.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Kinnevik Investment AB  vs.  Auto Trader Group

Kinnevik Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinnevik Investment AB are ranked lower than 14 (%) 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.

Auto Trader Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Auto Trader Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Auto Trader is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kinnevik Investment and Auto Trader

The main advantage of trading using opposite Kinnevik Investment and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinnevik Investment position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's long position.

The idea behind Kinnevik Investment AB and Auto Trader Group 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.