Correlation Between Kenon Holdings and Kamada

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

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

Diversification Opportunities for Kenon Holdings and Kamada

0.72

Correlation Coefficient

Kenon Holdings  Kamada

Poor diversification

The 3 months correlation between Kenon and Kamada is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and Kamada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamada and Kenon Holdings 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 Kenon Holdings are associated (or correlated) with Kamada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kamada has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and Kamada go up and down completely randomly.

Pair Corralation between Kenon Holdings and Kamada

Assuming the 90 days trading horizon Kenon Holdings is expected to generate 1.38 times more return on investment than Kamada. However, Kenon Holdings is 1.38 times more volatile than Kamada. It trades about 0.17 of its potential returns per unit of risk. Kamada is currently generating about 0.17 per unit of risk. If you would invest  1,106,000  in Kenon Holdings on October 7, 2024 and sell it today you would earn a total of  79,000  from holding Kenon Holdings or generate 7.14% return on investment over 90 days.

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

Kenon Holdings  vs.  Kamada

Kenon Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kenon Holdings are ranked lower than 13 (%) 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.

Kamada

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kamada are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kamada sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kenon Holdings and Kamada

The main advantage of trading using opposite Kenon Holdings and Kamada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenon Holdings position performs unexpectedly, Kamada 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 Kamada will offset losses from the drop in Kamada's long position.

The idea behind Kenon Holdings and Kamada 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.