Correlation Between Precision Drilling and Kenon Holdings

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

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

Diversification Opportunities for Precision Drilling and Kenon Holdings

-0.24

Correlation Coefficient

Precision Drilling  Kenon Holdings

Very good diversification

The 3 months correlation between Precision and Kenon is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and Precision Drilling 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 Precision Drilling 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 Precision Drilling i.e., Precision Drilling and Kenon Holdings go up and down completely randomly.

Pair Corralation between Precision Drilling and Kenon Holdings

Considering the 90-day investment horizon Precision Drilling is expected to under-perform the Kenon Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Precision Drilling is 1.03 times less risky than Kenon Holdings. The stock trades about -0.16 of its potential returns per unit of risk. The Kenon Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,934  in Kenon Holdings on December 19, 2024 and sell it today you would earn a total of  372.00  from holding Kenon Holdings or generate 12.68% return on investment over 90 days.

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

Precision Drilling  vs.  Kenon Holdings

Precision Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Precision Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Kenon Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kenon Holdings are ranked lower than 7 (%) 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.

Pair Trading with Precision Drilling and Kenon Holdings

The main advantage of trading using opposite Precision Drilling and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling 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 Precision Drilling 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 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.