Correlation Between VPC Specialty and Kinnevik Investment

Can any of the company-specific risk be diversified away by investing in both VPC Specialty 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 VPC Specialty and Kinnevik Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VPC Specialty Lending and Kinnevik Investment AB, you can compare the effects of market volatilities on VPC Specialty 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 VPC Specialty with a short position of Kinnevik Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of VPC Specialty and Kinnevik Investment.

Diversification Opportunities for VPC Specialty and Kinnevik Investment

0.71

Correlation Coefficient

VPC Specialty  Kinnevik Investment

Poor diversification

The 3 months correlation between VPC and Kinnevik is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding VPC Specialty Lending and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and VPC Specialty 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 VPC Specialty Lending 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 VPC Specialty i.e., VPC Specialty and Kinnevik Investment go up and down completely randomly.

Pair Corralation between VPC Specialty and Kinnevik Investment

Assuming the 90 days trading horizon VPC Specialty is expected to generate 1.4 times less return on investment than Kinnevik Investment. In addition to that, VPC Specialty is 1.25 times more volatile than Kinnevik Investment AB. It trades about 0.11 of its total potential returns per unit of risk. Kinnevik Investment AB is currently generating about 0.19 per unit of volatility. If you would invest  7,392  in Kinnevik Investment AB on April 21, 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	Significant
Accuracy	96.92%
Values	Daily Returns

VPC Specialty Lending  vs.  Kinnevik Investment AB

VPC Specialty Lending

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VPC Specialty Lending are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, VPC Specialty exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with VPC Specialty and Kinnevik Investment

The main advantage of trading using opposite VPC Specialty and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VPC Specialty 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.

The idea behind VPC Specialty Lending and Kinnevik Investment AB 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.