Correlation Between Kenon Holdings and Catalyst Pharmaceuticals

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

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

Diversification Opportunities for Kenon Holdings and Catalyst Pharmaceuticals

0.51

Correlation Coefficient

Kenon Holdings  Catalyst Pharmaceuticals

Very weak diversification

The 3 months correlation between Kenon and Catalyst is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and Catalyst Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Pharmaceuticals has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and Catalyst Pharmaceuticals go up and down completely randomly.

Pair Corralation between Kenon Holdings and Catalyst Pharmaceuticals

Considering the 90-day investment horizon Kenon Holdings is expected to under-perform the Catalyst Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Kenon Holdings is 1.02 times less risky than Catalyst Pharmaceuticals. The stock trades about -0.03 of its potential returns per unit of risk. The Catalyst Pharmaceuticals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,139  in Catalyst Pharmaceuticals on September 20, 2024 and sell it today you would lose (4.00) from holding Catalyst Pharmaceuticals or give up 0.19% of portfolio value over 90 days.

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

Kenon Holdings  vs.  Catalyst Pharmaceuticals

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.

Catalyst Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Catalyst Pharmaceuticals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kenon Holdings and Catalyst Pharmaceuticals

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

The idea behind Kenon Holdings and Catalyst Pharmaceuticals 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.