Correlation Between Kenon Holdings and Eastern
Can any of the company-specific risk be diversified away by investing in both Kenon Holdings and Eastern 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 Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenon Holdings and Eastern Co, you can compare the effects of market volatilities on Kenon Holdings and Eastern 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 Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenon Holdings and Eastern.
Diversification Opportunities for Kenon Holdings and Eastern
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kenon and Eastern is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern 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 Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and Eastern go up and down completely randomly.
Pair Corralation between Kenon Holdings and Eastern
Considering the 90-day investment horizon Kenon Holdings is expected to generate 0.68 times more return on investment than Eastern. However, Kenon Holdings is 1.48 times less risky than Eastern. It trades about 0.2 of its potential returns per unit of risk. Eastern Co is currently generating about -0.02 per unit of risk. If you would invest 2,811 in Kenon Holdings on September 4, 2024 and sell it today you would earn a total of 218.00 from holding Kenon Holdings or generate 7.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kenon Holdings vs. Eastern Co
Performance |
| Timeline |
| Kenon Holdings |
| Eastern |
Kenon Holdings and Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenon Holdings and Eastern
The main advantage of trading using opposite Kenon Holdings and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenon Holdings position performs unexpectedly, Eastern 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 Eastern will offset losses from the drop in Eastern'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 |
| Eastern vs. AB SKF | Eastern vs. Aquagold International | Eastern vs. Thrivent High Yield | Eastern vs. Morningstar Unconstrained Allocation |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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