Correlation Between CapitaLand Investment and Kenon Holdings

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

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

Diversification Opportunities for CapitaLand Investment and Kenon Holdings

-0.28

Correlation Coefficient

CapitaLand Investment  Kenon Holdings

Very good diversification

The 3 months correlation between CapitaLand and Kenon is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and CapitaLand Investment 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 CapitaLand Investment Limited 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 CapitaLand Investment i.e., CapitaLand Investment and Kenon Holdings go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Kenon Holdings

Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the Kenon Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, CapitaLand Investment Limited is 1.06 times less risky than Kenon Holdings. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Kenon Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,192  in Kenon Holdings on December 29, 2024 and sell it today you would lose (27.00) from holding Kenon Holdings or give up 0.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CapitaLand Investment Limited  vs.  Kenon Holdings

CapitaLand Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days CapitaLand Investment Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kenon Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kenon Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. 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 CapitaLand Investment and Kenon Holdings

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

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.