Correlation Between Kenon Holdings and Suburban Propane

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

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

Diversification Opportunities for Kenon Holdings and Suburban Propane

0.37

Correlation Coefficient

Kenon Holdings  Suburban Propane

Weak diversification

The 3 months correlation between Kenon and Suburban is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and Suburban Propane Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suburban Propane Partners 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 Suburban Propane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suburban Propane Partners has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and Suburban Propane go up and down completely randomly.

Pair Corralation between Kenon Holdings and Suburban Propane

Considering the 90-day investment horizon Kenon Holdings is expected to generate 24.08 times less return on investment than Suburban Propane. In addition to that, Kenon Holdings is 1.25 times more volatile than Suburban Propane Partners. It trades about 0.01 of its total potential returns per unit of risk. Suburban Propane Partners is currently generating about 0.21 per unit of volatility. If you would invest  1,693  in Suburban Propane Partners on December 25, 2024 and sell it today you would earn a total of  395.00  from holding Suburban Propane Partners or generate 23.33% return on investment over 90 days.

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

Kenon Holdings  vs.  Suburban Propane Partners

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.

Suburban Propane Partners

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Suburban Propane Partners are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Suburban Propane demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kenon Holdings and Suburban Propane

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

The idea behind Kenon Holdings and Suburban Propane Partners 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.