Correlation Between Kenon Holdings and Leggett Platt

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

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

Diversification Opportunities for Kenon Holdings and Leggett Platt

0.56

Correlation Coefficient

Kenon Holdings  Leggett Platt

Very weak diversification

The 3 months correlation between Kenon and Leggett is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and Leggett Platt Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt 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 Leggett Platt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggett Platt has no effect on the direction of Kenon Holdings i.e., Kenon Holdings and Leggett Platt go up and down completely randomly.

Pair Corralation between Kenon Holdings and Leggett Platt

Considering the 90-day investment horizon Kenon Holdings is expected to generate 0.62 times more return on investment than Leggett Platt. However, Kenon Holdings is 1.62 times less risky than Leggett Platt. It trades about 0.33 of its potential returns per unit of risk. Leggett Platt Incorporated is currently generating about -0.02 per unit of risk. If you would invest  3,077  in Kenon Holdings on May 7, 2025 and sell it today you would earn a total of  1,412  from holding Kenon Holdings or generate 45.89% 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.  Leggett Platt Incorporated

Kenon Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kenon Holdings are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Kenon Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Leggett Platt

Risk-Adjusted Performance

Weakest

Over the last 90 days Leggett Platt Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Leggett Platt is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kenon Holdings and Leggett Platt

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

The idea behind Kenon Holdings and Leggett Platt Incorporated 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.