Correlation Between Enlight Renewable and Kenon Holdings

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

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

Diversification Opportunities for Enlight Renewable and Kenon Holdings

-0.14

Correlation Coefficient

Enlight Renewable  Kenon Holdings

Good diversification

The 3 months correlation between Enlight and Kenon is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Enlight Renewable Energy and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings and Enlight Renewable 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 Enlight Renewable Energy 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 Enlight Renewable i.e., Enlight Renewable and Kenon Holdings go up and down completely randomly.

Pair Corralation between Enlight Renewable and Kenon Holdings

Assuming the 90 days trading horizon Enlight Renewable Energy is expected to under-perform the Kenon Holdings. In addition to that, Enlight Renewable is 1.05 times more volatile than Kenon Holdings. It trades about -0.01 of its total potential returns per unit of risk. Kenon Holdings is currently generating about 0.16 per unit of volatility. If you would invest  951,000  in Kenon Holdings on September 16, 2024 and sell it today you would earn a total of  134,000  from holding Kenon Holdings or generate 14.09% return on investment over 90 days.

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

Enlight Renewable Energy  vs.  Kenon Holdings

Enlight Renewable Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enlight Renewable Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Enlight Renewable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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. 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 Enlight Renewable and Kenon Holdings

The main advantage of trading using opposite Enlight Renewable and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enlight Renewable 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 Enlight Renewable Energy 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.