Correlation Between NetEase and Kenon Holdings
Can any of the company-specific risk be diversified away by investing in both NetEase and Kenon Holdings 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 NetEase and Kenon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NetEase and Kenon Holdings, you can compare the effects of market volatilities on NetEase and Kenon Holdings 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 NetEase with a short position of Kenon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetEase and Kenon Holdings.
Diversification Opportunities for NetEase and Kenon Holdings
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NetEase and Kenon is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding NetEase and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and NetEase 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 NetEase are associated (or correlated) with Kenon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenon Holdings has no effect on the direction of NetEase i.e., NetEase and Kenon Holdings go up and down completely randomly.
Pair Corralation between NetEase and Kenon Holdings
Given the investment horizon of 90 days NetEase is expected to generate 215.08 times less return on investment than Kenon Holdings. In addition to that, NetEase is 1.21 times more volatile than Kenon Holdings. It trades about 0.0 of its total potential returns per unit of risk. Kenon Holdings is currently generating about 0.12 per unit of volatility. If you would invest 1,606 in Kenon Holdings on October 21, 2024 and sell it today you would earn a total of 1,731 from holding Kenon Holdings or generate 107.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NetEase vs. Kenon Holdings
Performance |
| Timeline |
| NetEase |
| Kenon Holdings |
NetEase and Kenon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NetEase and Kenon Holdings
The main advantage of trading using opposite NetEase and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetEase position performs unexpectedly, Kenon Holdings 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 Kenon Holdings will offset losses from the drop in Kenon Holdings' long position.| NetEase vs. Roblox Corp | NetEase vs. Skillz Platform | NetEase vs. Take Two Interactive Software | NetEase vs. Nintendo Co ADR |
| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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