Correlation Between Kenon Holdings and Virtus Investment

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

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

Diversification Opportunities for Kenon Holdings and Virtus Investment

0.54

Correlation Coefficient

Kenon Holdings  Virtus Investment

Very weak diversification

The 3 months correlation between Kenon and Virtus is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and Virtus Investment Partners, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and Virtus Investment go up and down completely randomly.

Pair Corralation between Kenon Holdings and Virtus Investment

Considering the 90-day investment horizon Kenon Holdings is expected to generate 1.07 times more return on investment than Virtus Investment. However, Kenon Holdings is 1.07 times more volatile than Virtus Investment Partners,. It trades about 0.03 of its potential returns per unit of risk. Virtus Investment Partners, is currently generating about 0.02 per unit of risk. If you would invest  2,617  in Kenon Holdings on October 10, 2024 and sell it today you would earn a total of  521.00  from holding Kenon Holdings or generate 19.91% return on investment over 90 days.

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

Kenon Holdings  vs.  Virtus Investment Partners,

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.

Virtus Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Virtus Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kenon Holdings and Virtus Investment

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

The idea behind Kenon Holdings and Virtus Investment 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 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.