Correlation Between Kenon Holdings and NetEase
Can any of the company-specific risk be diversified away by investing in both Kenon Holdings and NetEase 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 NetEase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenon Holdings and NetEase, you can compare the effects of market volatilities on Kenon Holdings and NetEase 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 NetEase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenon Holdings and NetEase.
Diversification Opportunities for Kenon Holdings and NetEase
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kenon and NetEase is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase 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 NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and NetEase go up and down completely randomly.
Pair Corralation between Kenon Holdings and NetEase
Considering the 90-day investment horizon Kenon Holdings is expected to generate 0.9 times more return on investment than NetEase. However, Kenon Holdings is 1.11 times less risky than NetEase. It trades about 0.11 of its potential returns per unit of risk. NetEase is currently generating about 0.01 per unit of risk. If you would invest 1,765 in Kenon Holdings on November 2, 2024 and sell it today you would earn a total of 1,308 from holding Kenon Holdings or generate 74.11% 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. NetEase
Performance |
| Timeline |
| Kenon Holdings |
| NetEase |
Kenon Holdings and NetEase Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenon Holdings and NetEase
The main advantage of trading using opposite Kenon Holdings and NetEase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenon Holdings position performs unexpectedly, NetEase 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 NetEase will offset losses from the drop in NetEase'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 |
| NetEase vs. Roblox Corp | NetEase vs. Skillz Platform | NetEase vs. Take Two Interactive Software | NetEase vs. Nintendo Co ADR |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |