Correlation Between Value Capital and Kenon Holdings
Can any of the company-specific risk be diversified away by investing in both Value Capital 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 Value Capital and Kenon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Value Capital One and Kenon Holdings, you can compare the effects of market volatilities on Value Capital 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 Value Capital with a short position of Kenon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Capital and Kenon Holdings.
Diversification Opportunities for Value Capital and Kenon Holdings
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Value and Kenon is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Value Capital One and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and Value Capital 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 Value Capital One 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 Value Capital i.e., Value Capital and Kenon Holdings go up and down completely randomly.
Pair Corralation between Value Capital and Kenon Holdings
Assuming the 90 days trading horizon Value Capital One is expected to under-perform the Kenon Holdings. In addition to that, Value Capital is 1.51 times more volatile than Kenon Holdings. It trades about -0.09 of its total potential returns per unit of risk. Kenon Holdings is currently generating about -0.02 per unit of volatility. If you would invest 1,044,000 in Kenon Holdings on August 25, 2024 and sell it today you would lose (11,000) from holding Kenon Holdings or give up 1.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Value Capital One vs. Kenon Holdings
Performance |
| Timeline |
| Value Capital One |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kenon Holdings |
Value Capital and Kenon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Value Capital and Kenon Holdings
The main advantage of trading using opposite Value Capital and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Capital 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.| Value Capital vs. Oron Group Investments | Value Capital vs. GODM Investments | Value Capital vs. Discount Investment Corp | Value Capital vs. Aura Investments |
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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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