Correlation Between Kenon Holdings and Ayala
Can any of the company-specific risk be diversified away by investing in both Kenon Holdings and Ayala 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 Ayala into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenon Holdings and Ayala, you can compare the effects of market volatilities on Kenon Holdings and Ayala 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 Ayala. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenon Holdings and Ayala.
Diversification Opportunities for Kenon Holdings and Ayala
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kenon and Ayala is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and Ayala in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayala 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 Ayala. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayala has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and Ayala go up and down completely randomly.
Pair Corralation between Kenon Holdings and Ayala
Considering the 90-day investment horizon Kenon Holdings is expected to generate 1.28 times more return on investment than Ayala. However, Kenon Holdings is 1.28 times more volatile than Ayala. It trades about 0.08 of its potential returns per unit of risk. Ayala is currently generating about -0.03 per unit of risk. If you would invest 2,107 in Kenon Holdings on September 14, 2024 and sell it today you would earn a total of 941.00 from holding Kenon Holdings or generate 44.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.98% |
| Values | Daily Returns |
Kenon Holdings vs. Ayala
Performance |
| Timeline |
| Kenon Holdings |
| Ayala |
Kenon Holdings and Ayala Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenon Holdings and Ayala
The main advantage of trading using opposite Kenon Holdings and Ayala positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenon Holdings position performs unexpectedly, Ayala 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 Ayala will offset losses from the drop in Ayala's long position.| Kenon Holdings vs. Vistra Energy Corp | Kenon Holdings vs. Pampa Energia SA | Kenon Holdings vs. NRG Energy | Kenon Holdings vs. TransAlta Corp |
| Ayala vs. Tianjin Capital Environmental | Ayala vs. Kulicke and Soffa | Ayala vs. Plexus Corp | Ayala vs. United States Steel |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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