Correlation Between Kenon Holdings and SkyWest

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

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

Diversification Opportunities for Kenon Holdings and SkyWest

-0.32

Correlation Coefficient

Kenon Holdings  SkyWest

Very good diversification

The 3 months correlation between Kenon and SkyWest is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and SkyWest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkyWest 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 SkyWest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SkyWest has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and SkyWest go up and down completely randomly.

Pair Corralation between Kenon Holdings and SkyWest

Considering the 90-day investment horizon Kenon Holdings is expected to generate 0.84 times more return on investment than SkyWest. However, Kenon Holdings is 1.2 times less risky than SkyWest. It trades about 0.02 of its potential returns per unit of risk. SkyWest is currently generating about -0.06 per unit of risk. If you would invest  3,156  in Kenon Holdings on December 27, 2024 and sell it today you would earn a total of  27.50  from holding Kenon Holdings or generate 0.87% return on investment over 90 days.

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

Kenon Holdings  vs.  SkyWest

Kenon Holdings

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kenon Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

SkyWest

Risk-Adjusted Performance

Very Weak

Over the last 90 days SkyWest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Kenon Holdings and SkyWest

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

The idea behind Kenon Holdings and SkyWest 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.