Correlation Between Kenon Holdings and Companhia Paranaense
Can any of the company-specific risk be diversified away by investing in both Kenon Holdings and Companhia Paranaense 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 Companhia Paranaense into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenon Holdings and Companhia Paranaense de, you can compare the effects of market volatilities on Kenon Holdings and Companhia Paranaense 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 Companhia Paranaense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenon Holdings and Companhia Paranaense.
Diversification Opportunities for Kenon Holdings and Companhia Paranaense
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kenon and Companhia is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense 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 Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and Companhia Paranaense go up and down completely randomly.
Pair Corralation between Kenon Holdings and Companhia Paranaense
Considering the 90-day investment horizon Kenon Holdings is expected to generate 0.96 times more return on investment than Companhia Paranaense. However, Kenon Holdings is 1.04 times less risky than Companhia Paranaense. It trades about 0.04 of its potential returns per unit of risk. Companhia Paranaense de is currently generating about -0.02 per unit of risk. If you would invest 2,268 in Kenon Holdings on December 12, 2024 and sell it today you would earn a total of 928.00 from holding Kenon Holdings or generate 40.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 60.85% |
| Values | Daily Returns |
Kenon Holdings vs. Companhia Paranaense de
Performance |
| Timeline |
| Kenon Holdings |
| Companhia Paranaense |
Kenon Holdings and Companhia Paranaense Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenon Holdings and Companhia Paranaense
The main advantage of trading using opposite Kenon Holdings and Companhia Paranaense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenon Holdings position performs unexpectedly, Companhia Paranaense 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 Companhia Paranaense will offset losses from the drop in Companhia Paranaense's long position.| Kenon Holdings vs. Vistra Energy Corp | ||
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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