Correlation Between CGN Power and Northland Power
Can any of the company-specific risk be diversified away by investing in both CGN Power and Northland Power 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 CGN Power and Northland Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CGN Power Co and Northland Power, you can compare the effects of market volatilities on CGN Power and Northland Power 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 CGN Power with a short position of Northland Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of CGN Power and Northland Power.
Diversification Opportunities for CGN Power and Northland Power
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between CGN and Northland is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding CGN Power Co and Northland Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northland Power and CGN Power 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 CGN Power Co are associated (or correlated) with Northland Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northland Power has no effect on the direction of CGN Power i.e., CGN Power and Northland Power go up and down completely randomly.
Pair Corralation between CGN Power and Northland Power
If you would invest 1,203 in Northland Power on October 20, 2024 and sell it today you would earn a total of 120.00 from holding Northland Power or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
CGN Power Co vs. Northland Power
Performance |
| Timeline |
| CGN Power |
| Northland Power |
CGN Power and Northland Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CGN Power and Northland Power
The main advantage of trading using opposite CGN Power and Northland Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CGN Power position performs unexpectedly, Northland Power 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 Northland Power will offset losses from the drop in Northland Power's long position.| CGN Power vs. Orsted AS | CGN Power vs. EDP Renovveis SA | CGN Power vs. Huaneng Power International | CGN Power vs. Power Assets Holdings |
| Northland Power vs. Orsted AS | Northland Power vs. EDP Renovveis SA | Northland Power vs. CGN Power Co | Northland Power vs. Huaneng Power International |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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