Correlation Between Kenon Holdings and Perceptive Capital

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

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

Diversification Opportunities for Kenon Holdings and Perceptive Capital

0.8

Correlation Coefficient

Kenon Holdings  Perceptive Capital

Very poor diversification

The 3 months correlation between Kenon and Perceptive is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and Perceptive Capital Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perceptive Capital 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 Perceptive Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perceptive Capital has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and Perceptive Capital go up and down completely randomly.

Pair Corralation between Kenon Holdings and Perceptive Capital

Considering the 90-day investment horizon Kenon Holdings is expected to generate 13.18 times more return on investment than Perceptive Capital. However, Kenon Holdings is 13.18 times more volatile than Perceptive Capital Solutions. It trades about 0.05 of its potential returns per unit of risk. Perceptive Capital Solutions is currently generating about 0.12 per unit of risk. If you would invest  3,075  in Kenon Holdings on October 11, 2024 and sell it today you would earn a total of  64.00  from holding Kenon Holdings or generate 2.08% return on investment over 90 days.

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

Kenon Holdings  vs.  Perceptive Capital Solutions

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. 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.

Perceptive Capital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perceptive Capital Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Perceptive Capital is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kenon Holdings and Perceptive Capital

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

The idea behind Kenon Holdings and Perceptive Capital Solutions 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.