Correlation Between OPC Energy and Kenon Holdings
Can any of the company-specific risk be diversified away by investing in both OPC Energy 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 OPC Energy and Kenon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OPC Energy and Kenon Holdings, you can compare the effects of market volatilities on OPC Energy 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 OPC Energy with a short position of Kenon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of OPC Energy and Kenon Holdings.
Diversification Opportunities for OPC Energy and Kenon Holdings
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between OPC and Kenon is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding OPC Energy and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and OPC Energy 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 OPC Energy 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 OPC Energy i.e., OPC Energy and Kenon Holdings go up and down completely randomly.
Pair Corralation between OPC Energy and Kenon Holdings
Assuming the 90 days trading horizon OPC Energy is expected to under-perform the Kenon Holdings. In addition to that, OPC Energy is 1.05 times more volatile than Kenon Holdings. It trades about -0.03 of its total potential returns per unit of risk. Kenon Holdings is currently generating about 0.11 per unit of volatility. If you would invest 1,044,000 in Kenon Holdings on August 29, 2024 and sell it today you would earn a total of 42,000 from holding Kenon Holdings or generate 4.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
OPC Energy vs. Kenon Holdings
Performance |
| Timeline |
| OPC Energy |
| Kenon Holdings |
OPC Energy and Kenon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OPC Energy and Kenon Holdings
The main advantage of trading using opposite OPC Energy and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OPC Energy 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.| OPC Energy vs. Enlight Renewable Energy | OPC Energy vs. Energix Renewable Energies | OPC Energy vs. Alony Hetz Properties | OPC Energy vs. Ormat Technologies |
| Kenon Holdings vs. ICL Israel Chemicals | Kenon Holdings vs. Tower Semiconductor | Kenon Holdings vs. Israel Corp | Kenon Holdings vs. Nova |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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