Correlation Between Gentex and Kenon Holdings

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

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

Diversification Opportunities for Gentex and Kenon Holdings

-0.54

Correlation Coefficient

Gentex  Kenon Holdings

Excellent diversification

The 3 months correlation between Gentex and Kenon is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and Gentex 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 Gentex 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 Gentex i.e., Gentex and Kenon Holdings go up and down completely randomly.

Pair Corralation between Gentex and Kenon Holdings

Given the investment horizon of 90 days Gentex is expected to under-perform the Kenon Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Gentex is 1.32 times less risky than Kenon Holdings. The stock trades about -0.17 of its potential returns per unit of risk. The Kenon Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,934  in Kenon Holdings on December 19, 2024 and sell it today you would earn a total of  372.00  from holding Kenon Holdings or generate 12.68% return on investment over 90 days.

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

Gentex  vs.  Kenon Holdings

Gentex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gentex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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 current disturbance may also be a sign of long term up-swing for the company investors.

Kenon Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kenon Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Kenon Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gentex and Kenon Holdings

The main advantage of trading using opposite Gentex and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentex 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 Gentex 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.