Correlation Between PGE Corp and Kenon Holdings

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

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

Diversification Opportunities for PGE Corp and Kenon Holdings

-0.25

Correlation Coefficient

PGE Corp  Kenon Holdings

Very good diversification

The 3 months correlation between PGE and Kenon is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding PGE Corp and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and PGE Corp 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 PGE Corp are associated (or correlated) with Kenon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenon Holdings has no effect on the direction of PGE Corp i.e., PGE Corp and Kenon Holdings go up and down completely randomly.

Pair Corralation between PGE Corp and Kenon Holdings

Considering the 90-day investment horizon PGE Corp is expected to under-perform the Kenon Holdings. In addition to that, PGE Corp is 1.08 times more volatile than Kenon Holdings. It trades about -0.11 of its total potential returns per unit of risk. Kenon Holdings is currently generating about 0.01 per unit of volatility. If you would invest  3,215  in Kenon Holdings on December 26, 2024 and sell it today you would lose (1.00) from holding Kenon Holdings or give up 0.03% of portfolio value over 90 days.

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

PGE Corp  vs.  Kenon Holdings

PGE Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days PGE Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with PGE Corp and Kenon Holdings

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

The idea behind PGE Corp and Kenon Holdings 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.