Correlation Between Cheniere Energy and Kenon Holdings
Can any of the company-specific risk be diversified away by investing in both Cheniere Energy 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 Cheniere Energy and Kenon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheniere Energy Partners and Kenon Holdings, you can compare the effects of market volatilities on Cheniere Energy 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 Cheniere Energy with a short position of Kenon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheniere Energy and Kenon Holdings.
Diversification Opportunities for Cheniere Energy and Kenon Holdings
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cheniere and Kenon is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy Partners and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and Cheniere 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 Cheniere Energy Partners 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 Cheniere Energy i.e., Cheniere Energy and Kenon Holdings go up and down completely randomly.
Pair Corralation between Cheniere Energy and Kenon Holdings
Considering the 90-day investment horizon Cheniere Energy Partners is expected to generate 0.76 times more return on investment than Kenon Holdings. However, Cheniere Energy Partners is 1.31 times less risky than Kenon Holdings. It trades about 0.5 of its potential returns per unit of risk. Kenon Holdings is currently generating about 0.11 per unit of risk. If you would invest 4,839 in Cheniere Energy Partners on August 30, 2024 and sell it today you would earn a total of 828.00 from holding Cheniere Energy Partners or generate 17.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheniere Energy Partners vs. Kenon Holdings
Performance |
| Timeline |
| Cheniere Energy Partners |
| Kenon Holdings |
Cheniere Energy and Kenon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheniere Energy and Kenon Holdings
The main advantage of trading using opposite Cheniere Energy and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheniere Energy 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.| Cheniere Energy vs. Plains All American | Cheniere Energy vs. Genesis Energy LP | Cheniere Energy vs. Western Midstream Partners | Cheniere Energy vs. Hess Midstream Partners |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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