Correlation Between Kenon Holdings and BLACK

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

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

Diversification Opportunities for Kenon Holdings and BLACK

-0.47

Correlation Coefficient

Kenon Holdings  BLACK

Very good diversification

The 3 months correlation between Kenon and BLACK is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and BLACK HILLS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLACK HILLS P 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 BLACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLACK HILLS P has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and BLACK go up and down completely randomly.

Pair Corralation between Kenon Holdings and BLACK

Considering the 90-day investment horizon Kenon Holdings is expected to generate 3.36 times more return on investment than BLACK. However, Kenon Holdings is 3.36 times more volatile than BLACK HILLS P. It trades about 0.06 of its potential returns per unit of risk. BLACK HILLS P is currently generating about 0.0 per unit of risk. If you would invest  1,905  in Kenon Holdings on October 23, 2024 and sell it today you would earn a total of  1,432  from holding Kenon Holdings or generate 75.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	63.64%
Values	Daily Returns

Kenon Holdings  vs.  BLACK HILLS P

Kenon Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kenon Holdings are ranked lower than 15 (%) 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.

BLACK HILLS P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BLACK HILLS P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BLACK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kenon Holdings and BLACK

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

The idea behind Kenon Holdings and BLACK HILLS P 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.