Correlation Between China State and Kenon Holdings
Can any of the company-specific risk be diversified away by investing in both China State and Kenon Holdings 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 China State and Kenon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China State Construction and Kenon Holdings, you can compare the effects of market volatilities on China State and Kenon Holdings 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 China State with a short position of Kenon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of China State and Kenon Holdings.
Diversification Opportunities for China State and Kenon Holdings
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Kenon is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding China State Construction and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and China State 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 China State Construction are associated (or correlated) with Kenon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenon Holdings has no effect on the direction of China State i.e., China State and Kenon Holdings go up and down completely randomly.
Pair Corralation between China State and Kenon Holdings
Assuming the 90 days horizon China State Construction is expected to under-perform the Kenon Holdings. In addition to that, China State is 3.19 times more volatile than Kenon Holdings. It trades about -0.22 of its total potential returns per unit of risk. Kenon Holdings is currently generating about 0.14 per unit of volatility. If you would invest 2,889 in Kenon Holdings on September 14, 2024 and sell it today you would earn a total of 159.00 from holding Kenon Holdings or generate 5.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China State Construction vs. Kenon Holdings
Performance |
| Timeline |
| China State Construction |
| Kenon Holdings |
China State and Kenon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China State and Kenon Holdings
The main advantage of trading using opposite China State and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China State position performs unexpectedly, Kenon Holdings 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 Kenon Holdings will offset losses from the drop in Kenon Holdings' long position.| China State vs. Sun Country Airlines | China State vs. Proficient Auto Logistics, | China State vs. Shake Shack | China State vs. The Cheesecake Factory |
| Kenon Holdings vs. Vistra Energy Corp | Kenon Holdings vs. Pampa Energia SA | Kenon Holdings vs. NRG Energy | Kenon Holdings vs. TransAlta Corp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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