Correlation Between Reservoir Media and Kenon Holdings
Can any of the company-specific risk be diversified away by investing in both Reservoir Media 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 Reservoir Media and Kenon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reservoir Media and Kenon Holdings, you can compare the effects of market volatilities on Reservoir Media 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 Reservoir Media with a short position of Kenon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reservoir Media and Kenon Holdings.
Diversification Opportunities for Reservoir Media and Kenon Holdings
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reservoir and Kenon is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Reservoir Media and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and Reservoir Media 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 Reservoir Media 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 Reservoir Media i.e., Reservoir Media and Kenon Holdings go up and down completely randomly.
Pair Corralation between Reservoir Media and Kenon Holdings
Given the investment horizon of 90 days Reservoir Media is expected to generate 1.18 times more return on investment than Kenon Holdings. However, Reservoir Media is 1.18 times more volatile than Kenon Holdings. It trades about 0.12 of its potential returns per unit of risk. Kenon Holdings is currently generating about 0.11 per unit of risk. If you would invest 879.00 in Reservoir Media on August 30, 2024 and sell it today you would earn a total of 48.00 from holding Reservoir Media or generate 5.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reservoir Media vs. Kenon Holdings
Performance |
| Timeline |
| Reservoir Media |
| Kenon Holdings |
Reservoir Media and Kenon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reservoir Media and Kenon Holdings
The main advantage of trading using opposite Reservoir Media and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reservoir Media 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.| Reservoir Media vs. Reading International | Reservoir Media vs. Marcus | Reservoir Media vs. Gaia Inc | Reservoir Media vs. News Corp B |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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