Correlation Between Datang International and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both Datang International and Pembina Pipeline 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 Datang International and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Datang International Power and Pembina Pipeline Corp, you can compare the effects of market volatilities on Datang International and Pembina Pipeline 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 Datang International with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datang International and Pembina Pipeline.
Diversification Opportunities for Datang International and Pembina Pipeline
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Datang and Pembina is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Datang International Power and Pembina Pipeline Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline Corp and Datang International 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 Datang International Power are associated (or correlated) with Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline Corp has no effect on the direction of Datang International i.e., Datang International and Pembina Pipeline go up and down completely randomly.
Pair Corralation between Datang International and Pembina Pipeline
Assuming the 90 days horizon Datang International Power is expected to generate 2.13 times more return on investment than Pembina Pipeline. However, Datang International is 2.13 times more volatile than Pembina Pipeline Corp. It trades about -0.03 of its potential returns per unit of risk. Pembina Pipeline Corp is currently generating about -0.07 per unit of risk. If you would invest 18.00 in Datang International Power on September 13, 2024 and sell it today you would lose (1.00) from holding Datang International Power or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Datang International Power vs. Pembina Pipeline Corp
Performance |
| Timeline |
| Datang International |
| Pembina Pipeline Corp |
Datang International and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Datang International and Pembina Pipeline
The main advantage of trading using opposite Datang International and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datang International position performs unexpectedly, Pembina Pipeline 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 Pembina Pipeline will offset losses from the drop in Pembina Pipeline's long position.| Datang International vs. Fevertree Drinks PLC | Datang International vs. MOLSON RS BEVERAGE | Datang International vs. ScanSource | Datang International vs. SCANSOURCE |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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