Correlation Between Kenon Holdings and AB Volvo
Can any of the company-specific risk be diversified away by investing in both Kenon Holdings and AB Volvo 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 AB Volvo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenon Holdings and AB Volvo, you can compare the effects of market volatilities on Kenon Holdings and AB Volvo 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 AB Volvo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenon Holdings and AB Volvo.
Diversification Opportunities for Kenon Holdings and AB Volvo
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kenon and VOLAF is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and AB Volvo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Volvo 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 AB Volvo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Volvo has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and AB Volvo go up and down completely randomly.
Pair Corralation between Kenon Holdings and AB Volvo
Considering the 90-day investment horizon Kenon Holdings is expected to generate 2.49 times less return on investment than AB Volvo. In addition to that, Kenon Holdings is 1.07 times more volatile than AB Volvo. It trades about 0.02 of its total potential returns per unit of risk. AB Volvo is currently generating about 0.05 per unit of volatility. If you would invest 1,882 in AB Volvo on August 30, 2024 and sell it today you would earn a total of 694.00 from holding AB Volvo or generate 36.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 72.12% |
| Values | Daily Returns |
Kenon Holdings vs. AB Volvo
Performance |
| Timeline |
| Kenon Holdings |
| AB Volvo |
Kenon Holdings and AB Volvo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenon Holdings and AB Volvo
The main advantage of trading using opposite Kenon Holdings and AB Volvo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenon Holdings position performs unexpectedly, AB Volvo 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 AB Volvo will offset losses from the drop in AB Volvo's long position.| Kenon Holdings vs. TransAlta Corp | Kenon Holdings vs. Pampa Energia SA | Kenon Holdings vs. AGL Energy | Kenon Holdings vs. Vistra Energy Corp |
| AB Volvo vs. Volvo AB ADR | AB Volvo vs. Deere Company | AB Volvo vs. Volvo AB ser | AB Volvo vs. Deutsche Post AG |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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