Correlation Between CN YANGTPWR and TransAlta
Can any of the company-specific risk be diversified away by investing in both CN YANGTPWR and TransAlta 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 CN YANGTPWR and TransAlta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN YANGTPWR GDR and TransAlta, you can compare the effects of market volatilities on CN YANGTPWR and TransAlta 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 CN YANGTPWR with a short position of TransAlta. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN YANGTPWR and TransAlta.
Diversification Opportunities for CN YANGTPWR and TransAlta
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CYZB and TransAlta is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CN YANGTPWR GDR and TransAlta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAlta and CN YANGTPWR 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 CN YANGTPWR GDR are associated (or correlated) with TransAlta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAlta has no effect on the direction of CN YANGTPWR i.e., CN YANGTPWR and TransAlta go up and down completely randomly.
Pair Corralation between CN YANGTPWR and TransAlta
Assuming the 90 days trading horizon CN YANGTPWR GDR is expected to under-perform the TransAlta. In addition to that, CN YANGTPWR is 1.58 times more volatile than TransAlta. It trades about -0.15 of its total potential returns per unit of risk. TransAlta is currently generating about -0.23 per unit of volatility. If you would invest 1,352 in TransAlta on November 2, 2024 and sell it today you would lose (313.00) from holding TransAlta or give up 23.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN YANGTPWR GDR vs. TransAlta
Performance |
| Timeline |
| CN YANGTPWR GDR |
| TransAlta |
CN YANGTPWR and TransAlta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN YANGTPWR and TransAlta
The main advantage of trading using opposite CN YANGTPWR and TransAlta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN YANGTPWR position performs unexpectedly, TransAlta 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 TransAlta will offset losses from the drop in TransAlta's long position.| CN YANGTPWR vs. Siemens Energy AG | CN YANGTPWR vs. Vistra Corp | CN YANGTPWR vs. Datang International Power |
| TransAlta vs. CN YANGTPWR GDR | TransAlta vs. Siemens Energy AG | TransAlta vs. Vistra Corp | TransAlta vs. Datang International Power |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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