Correlation Between Kenon Holdings and Vodka Brands

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

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

Diversification Opportunities for Kenon Holdings and Vodka Brands

0.43

Correlation Coefficient

Kenon Holdings  Vodka Brands

Very weak diversification

The 3 months correlation between Kenon and Vodka is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and Vodka Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodka Brands Corp 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 Vodka Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodka Brands Corp has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and Vodka Brands go up and down completely randomly.

Pair Corralation between Kenon Holdings and Vodka Brands

Considering the 90-day investment horizon Kenon Holdings is expected to generate 0.47 times more return on investment than Vodka Brands. However, Kenon Holdings is 2.11 times less risky than Vodka Brands. It trades about 0.16 of its potential returns per unit of risk. Vodka Brands Corp is currently generating about 0.03 per unit of risk. If you would invest  2,719  in Kenon Holdings on September 27, 2024 and sell it today you would earn a total of  496.00  from holding Kenon Holdings or generate 18.24% return on investment over 90 days.

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

Kenon Holdings  vs.  Vodka Brands Corp

Kenon Holdings

Risk-Adjusted Performance

12 of 100

OK

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. 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.

Vodka Brands Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vodka Brands Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, Vodka Brands is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kenon Holdings and Vodka Brands

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

The idea behind Kenon Holdings and Vodka Brands Corp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.