Correlation Between TRON and Kenon Holdings

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

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

Diversification Opportunities for TRON and Kenon Holdings

-0.49

Correlation Coefficient

TRON  Kenon Holdings

Very good diversification

The 3 months correlation between TRON and Kenon is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and TRON 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 TRON 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 TRON i.e., TRON and Kenon Holdings go up and down completely randomly.

Pair Corralation between TRON and Kenon Holdings

Assuming the 90 days trading horizon TRON is expected to generate 3.07 times less return on investment than Kenon Holdings. In addition to that, TRON is 1.64 times more volatile than Kenon Holdings. It trades about 0.02 of its total potential returns per unit of risk. Kenon Holdings is currently generating about 0.1 per unit of volatility. If you would invest  1,080,000  in Kenon Holdings on December 20, 2024 and sell it today you would earn a total of  111,000  from holding Kenon Holdings or generate 10.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	79.37%
Values	Daily Returns

TRON  vs.  Kenon Holdings

TRON

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, TRON is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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. Despite somewhat weak basic indicators, Kenon Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TRON and Kenon Holdings

The main advantage of trading using opposite TRON and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON 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 TRON 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.