Correlation Between Kenon Holdings and Alony Hetz

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

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

Diversification Opportunities for Kenon Holdings and Alony Hetz

0.83

Correlation Coefficient

Kenon Holdings  Alony Hetz

Very poor diversification

The 3 months correlation between Kenon and Alony is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and Alony Hetz Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alony Hetz Properties and Kenon Holdings 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 Kenon Holdings are associated (or correlated) with Alony Hetz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alony Hetz Properties has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and Alony Hetz go up and down completely randomly.

Pair Corralation between Kenon Holdings and Alony Hetz

Assuming the 90 days trading horizon Kenon Holdings is expected to generate 0.82 times more return on investment than Alony Hetz. However, Kenon Holdings is 1.22 times less risky than Alony Hetz. It trades about 0.16 of its potential returns per unit of risk. Alony Hetz Properties is currently generating about 0.13 per unit of risk. 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 Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Kenon Holdings  vs.  Alony Hetz Properties

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.

Alony Hetz Properties

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alony Hetz Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Alony Hetz sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kenon Holdings and Alony Hetz

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

The idea behind Kenon Holdings and Alony Hetz Properties 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.