Correlation Between Kenon Holdings and SkyCity Entertainment

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Can any of the company-specific risk be diversified away by investing in both Kenon Holdings and SkyCity Entertainment 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 SkyCity Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenon Holdings and SkyCity Entertainment Group, you can compare the effects of market volatilities on Kenon Holdings and SkyCity Entertainment 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 SkyCity Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenon Holdings and SkyCity Entertainment.

Diversification Opportunities for Kenon Holdings and SkyCity Entertainment

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Kenon and SkyCity is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and SkyCity Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkyCity Entertainment 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 SkyCity Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SkyCity Entertainment has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and SkyCity Entertainment go up and down completely randomly.

Pair Corralation between Kenon Holdings and SkyCity Entertainment

Considering the 90-day investment horizon Kenon Holdings is expected to generate 0.8 times more return on investment than SkyCity Entertainment. However, Kenon Holdings is 1.25 times less risky than SkyCity Entertainment. It trades about 0.06 of its potential returns per unit of risk. SkyCity Entertainment Group is currently generating about -0.05 per unit of risk. If you would invest  1,803  in Kenon Holdings on November 2, 2024 and sell it today you would earn a total of  1,282  from holding Kenon Holdings or generate 71.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy69.23%
ValuesDaily Returns

Kenon Holdings  vs.  SkyCity Entertainment Group

 Performance 
       Timeline  
Kenon Holdings 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Kenon Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Kenon Holdings may actually be approaching a critical reversion point that can send shares even higher in March 2025.
SkyCity Entertainment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SkyCity Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kenon Holdings and SkyCity Entertainment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kenon Holdings and SkyCity Entertainment

The main advantage of trading using opposite Kenon Holdings and SkyCity Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenon Holdings position performs unexpectedly, SkyCity Entertainment 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 SkyCity Entertainment will offset losses from the drop in SkyCity Entertainment's long position.
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The idea behind Kenon Holdings and SkyCity Entertainment Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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