Correlation Between Kenon Holdings and Veridis Environment
Can any of the company-specific risk be diversified away by investing in both Kenon Holdings and Veridis Environment 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 Kenon Holdings and Veridis Environment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenon Holdings and Veridis Environment, you can compare the effects of market volatilities on Kenon Holdings and Veridis Environment 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 Kenon Holdings with a short position of Veridis Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenon Holdings and Veridis Environment.
Diversification Opportunities for Kenon Holdings and Veridis Environment
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kenon and Veridis is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and Veridis Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veridis Environment and Kenon Holdings 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 Kenon Holdings are associated (or correlated) with Veridis Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veridis Environment has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and Veridis Environment go up and down completely randomly.
Pair Corralation between Kenon Holdings and Veridis Environment
Assuming the 90 days trading horizon Kenon Holdings is expected to generate 1.18 times less return on investment than Veridis Environment. But when comparing it to its historical volatility, Kenon Holdings is 1.14 times less risky than Veridis Environment. It trades about 0.07 of its potential returns per unit of risk. Veridis Environment is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 184,700 in Veridis Environment on August 29, 2024 and sell it today you would earn a total of 58,000 from holding Veridis Environment or generate 31.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kenon Holdings vs. Veridis Environment
Performance |
| Timeline |
| Kenon Holdings |
| Veridis Environment |
Kenon Holdings and Veridis Environment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenon Holdings and Veridis Environment
The main advantage of trading using opposite Kenon Holdings and Veridis Environment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenon Holdings position performs unexpectedly, Veridis Environment 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 Veridis Environment will offset losses from the drop in Veridis Environment's long position.| Kenon Holdings vs. ICL Israel Chemicals | Kenon Holdings vs. Tower Semiconductor | Kenon Holdings vs. Israel Corp | Kenon Holdings vs. Nova |
| Veridis Environment vs. Intelicanna | Veridis Environment vs. Aerodrome Group | Veridis Environment vs. Opal Balance | Veridis Environment vs. B Communications |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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