Correlation Between Tamar Petroleum and Kenon Holdings
Can any of the company-specific risk be diversified away by investing in both Tamar Petroleum 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 Tamar Petroleum and Kenon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tamar Petroleum and Kenon Holdings, you can compare the effects of market volatilities on Tamar Petroleum 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 Tamar Petroleum with a short position of Kenon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tamar Petroleum and Kenon Holdings.
Diversification Opportunities for Tamar Petroleum and Kenon Holdings
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tamar and Kenon is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Tamar Petroleum and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and Tamar Petroleum 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 Tamar Petroleum 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 Tamar Petroleum i.e., Tamar Petroleum and Kenon Holdings go up and down completely randomly.
Pair Corralation between Tamar Petroleum and Kenon Holdings
Assuming the 90 days trading horizon Tamar Petroleum is expected to generate 0.8 times more return on investment than Kenon Holdings. However, Tamar Petroleum is 1.25 times less risky than Kenon Holdings. It trades about 0.38 of its potential returns per unit of risk. Kenon Holdings is currently generating about 0.11 per unit of risk. If you would invest 216,000 in Tamar Petroleum on August 29, 2024 and sell it today you would earn a total of 28,000 from holding Tamar Petroleum or generate 12.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tamar Petroleum vs. Kenon Holdings
Performance |
| Timeline |
| Tamar Petroleum |
| Kenon Holdings |
Tamar Petroleum and Kenon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tamar Petroleum and Kenon Holdings
The main advantage of trading using opposite Tamar Petroleum and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tamar Petroleum 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.| Tamar Petroleum vs. Atreyu Capital Markets | Tamar Petroleum vs. IBI Inv House | Tamar Petroleum vs. Delek Automotive Systems | Tamar Petroleum vs. Scope Metals Group |
| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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