Correlation Between Aquagold International and Kenon Holdings

Can any of the company-specific risk be diversified away by investing in both Aquagold International 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 Aquagold International and Kenon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aquagold International and Kenon Holdings, you can compare the effects of market volatilities on Aquagold International 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 Aquagold International with a short position of Kenon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Kenon Holdings.

Diversification Opportunities for Aquagold International and Kenon Holdings

-0.36

Correlation Coefficient

Aquagold International  Kenon Holdings

Very good diversification

The 3 months correlation between Aquagold and Kenon is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and Aquagold International 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 Aquagold International 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 Aquagold International i.e., Aquagold International and Kenon Holdings go up and down completely randomly.

Pair Corralation between Aquagold International and Kenon Holdings

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Kenon Holdings. In addition to that, Aquagold International is 2.87 times more volatile than Kenon Holdings. It trades about -0.13 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  3,192  in Kenon Holdings on December 28, 2024 and sell it today you would earn a total of  22.00  from holding Kenon Holdings or generate 0.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Aquagold International  vs.  Kenon Holdings

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Kenon Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kenon Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Kenon Holdings is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aquagold International and Kenon Holdings

The main advantage of trading using opposite Aquagold International and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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.

The idea behind Aquagold International and Kenon Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.