Correlation Between RWE AG and Kenon Holdings
Can any of the company-specific risk be diversified away by investing in both RWE AG 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 RWE AG and Kenon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RWE AG PK and Kenon Holdings, you can compare the effects of market volatilities on RWE AG 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 RWE AG with a short position of Kenon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of RWE AG and Kenon Holdings.
Diversification Opportunities for RWE AG and Kenon Holdings
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between RWE and Kenon is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding RWE AG PK and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and RWE AG 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 RWE AG PK 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 RWE AG i.e., RWE AG and Kenon Holdings go up and down completely randomly.
Pair Corralation between RWE AG and Kenon Holdings
Assuming the 90 days horizon RWE AG PK is expected to under-perform the Kenon Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, RWE AG PK is 1.04 times less risky than Kenon Holdings. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Kenon Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,780 in Kenon Holdings on August 28, 2024 and sell it today you would earn a total of 170.00 from holding Kenon Holdings or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RWE AG PK vs. Kenon Holdings
Performance |
| Timeline |
| RWE AG PK |
| Kenon Holdings |
RWE AG and Kenon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RWE AG and Kenon Holdings
The main advantage of trading using opposite RWE AG and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RWE AG 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.| RWE AG vs. TransAlta Corp | RWE AG vs. Pampa Energia SA | RWE AG vs. Vistra Energy Corp | RWE AG vs. NRG Energy |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |