Correlation Between Alphabet and Kenon Holdings
Can any of the company-specific risk be diversified away by investing in both Alphabet 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 Alphabet and Kenon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and Kenon Holdings, you can compare the effects of market volatilities on Alphabet 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 Alphabet with a short position of Kenon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Kenon Holdings.
Diversification Opportunities for Alphabet and Kenon Holdings
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alphabet and Kenon is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and Alphabet 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 Alphabet Inc Class C 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 Alphabet i.e., Alphabet and Kenon Holdings go up and down completely randomly.
Pair Corralation between Alphabet and Kenon Holdings
Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 1.07 times more return on investment than Kenon Holdings. However, Alphabet is 1.07 times more volatile than Kenon Holdings. It trades about 0.04 of its potential returns per unit of risk. Kenon Holdings is currently generating about -0.02 per unit of risk. If you would invest 16,453 in Alphabet Inc Class C on August 25, 2024 and sell it today you would earn a total of 204.00 from holding Alphabet Inc Class C or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.27% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Kenon Holdings
Performance |
| Timeline |
| Alphabet Class C |
| Kenon Holdings |
Alphabet and Kenon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Kenon Holdings
The main advantage of trading using opposite Alphabet and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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.The idea behind Alphabet Inc Class C and Kenon Holdings 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.| Kenon Holdings vs. ICL Israel Chemicals | Kenon Holdings vs. Tower Semiconductor | Kenon Holdings vs. Israel Corp | Kenon Holdings vs. Nova |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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