Correlation Between LEVEL and Kenon Holdings

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

By analyzing existing cross correlation between LEVEL 3 FING and Kenon Holdings, you can compare the effects of market volatilities on LEVEL 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 LEVEL with a short position of Kenon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEVEL and Kenon Holdings.

Diversification Opportunities for LEVEL and Kenon Holdings

0.24

Correlation Coefficient

LEVEL  Kenon Holdings

Modest diversification

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

Pair Corralation between LEVEL and Kenon Holdings

Assuming the 90 days trading horizon LEVEL 3 FING is expected to under-perform the Kenon Holdings. In addition to that, LEVEL is 4.81 times more volatile than Kenon Holdings. It trades about -0.08 of its total potential returns per unit of risk. Kenon Holdings is currently generating about 0.17 per unit of volatility. If you would invest  2,472  in Kenon Holdings on September 17, 2024 and sell it today you would earn a total of  491.00  from holding Kenon Holdings or generate 19.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	86.15%
Values	Daily Returns

LEVEL 3 FING  vs.  Kenon Holdings

LEVEL 3 FING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LEVEL 3 FING has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for LEVEL 3 FING investors.

Kenon Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kenon Holdings are ranked lower than 13 (%) 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 LEVEL and Kenon Holdings

The main advantage of trading using opposite LEVEL and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEVEL 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 LEVEL 3 FING 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.