Correlation Between Kenon Holdings and Maxim Power
Can any of the company-specific risk be diversified away by investing in both Kenon Holdings and Maxim Power 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 Maxim Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenon Holdings and Maxim Power Corp, you can compare the effects of market volatilities on Kenon Holdings and Maxim Power 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 Maxim Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenon Holdings and Maxim Power.
Diversification Opportunities for Kenon Holdings and Maxim Power
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kenon and Maxim is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and Maxim Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxim Power Corp 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 Maxim Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxim Power Corp has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and Maxim Power go up and down completely randomly.
Pair Corralation between Kenon Holdings and Maxim Power
Considering the 90-day investment horizon Kenon Holdings is expected to generate 1.03 times less return on investment than Maxim Power. But when comparing it to its historical volatility, Kenon Holdings is 1.02 times less risky than Maxim Power. It trades about 0.06 of its potential returns per unit of risk. Maxim Power Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 330.00 in Maxim Power Corp on August 24, 2024 and sell it today you would earn a total of 41.00 from holding Maxim Power Corp or generate 12.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kenon Holdings vs. Maxim Power Corp
Performance |
| Timeline |
| Kenon Holdings |
| Maxim Power Corp |
Kenon Holdings and Maxim Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenon Holdings and Maxim Power
The main advantage of trading using opposite Kenon Holdings and Maxim Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenon Holdings position performs unexpectedly, Maxim Power 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 Maxim Power will offset losses from the drop in Maxim Power'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 |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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