Correlation Between Export Inv and Kenon Holdings

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

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

Diversification Opportunities for Export Inv and Kenon Holdings

0.68

Correlation Coefficient

Export Inv  Kenon Holdings

Poor diversification

The 3 months correlation between Export and Kenon is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Export Inv and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and Export Inv 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 Export Inv 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 Export Inv i.e., Export Inv and Kenon Holdings go up and down completely randomly.

Pair Corralation between Export Inv and Kenon Holdings

Assuming the 90 days trading horizon Export Inv is expected to generate 1.62 times more return on investment than Kenon Holdings. However, Export Inv is 1.62 times more volatile than Kenon Holdings. It trades about 0.19 of its potential returns per unit of risk. Kenon Holdings is currently generating about 0.16 per unit of risk. If you would invest  498,500  in Export Inv on October 10, 2024 and sell it today you would earn a total of  173,500  from holding Export Inv or generate 34.8% return on investment over 90 days.

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

Export Inv  vs.  Kenon Holdings

Export Inv

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Export Inv are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Export Inv sustained solid returns over the last few months and may actually be approaching a breakup point.

Kenon Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kenon Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kenon Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Export Inv and Kenon Holdings

The main advantage of trading using opposite Export Inv and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Export Inv 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 Export Inv 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.