Correlation Between Kenon Holdings and PGE Corp

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

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

Diversification Opportunities for Kenon Holdings and PGE Corp

-0.25

Correlation Coefficient

Kenon Holdings  PGE Corp

Very good diversification

The 3 months correlation between Kenon and PGE is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and PGE Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGE Corp 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 PGE Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGE Corp has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and PGE Corp go up and down completely randomly.

Pair Corralation between Kenon Holdings and PGE Corp

Considering the 90-day investment horizon Kenon Holdings is expected to generate 0.93 times more return on investment than PGE Corp. However, Kenon Holdings is 1.08 times less risky than PGE Corp. It trades about 0.01 of its potential returns per unit of risk. PGE Corp is currently generating about -0.11 per unit of risk. If you would invest  3,215  in Kenon Holdings on December 26, 2024 and sell it today you would lose (1.00) from holding Kenon Holdings or give up 0.03% of portfolio value over 90 days.

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

Kenon Holdings  vs.  PGE Corp

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.

PGE Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days PGE Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental 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.

Pair Trading with Kenon Holdings and PGE Corp

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

The idea behind Kenon Holdings and PGE Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.