Correlation Between TransAlta Corp and China Resources
Can any of the company-specific risk be diversified away by investing in both TransAlta Corp and China Resources 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 TransAlta Corp and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TransAlta Corp and China Resources Power, you can compare the effects of market volatilities on TransAlta Corp and China Resources 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 TransAlta Corp with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of TransAlta Corp and China Resources.
Diversification Opportunities for TransAlta Corp and China Resources
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TransAlta and China is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding TransAlta Corp and China Resources Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Power and TransAlta Corp 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 TransAlta Corp are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Power has no effect on the direction of TransAlta Corp i.e., TransAlta Corp and China Resources go up and down completely randomly.
Pair Corralation between TransAlta Corp and China Resources
If you would invest 999.00 in TransAlta Corp on September 12, 2024 and sell it today you would earn a total of 312.00 from holding TransAlta Corp or generate 31.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TransAlta Corp vs. China Resources Power
Performance |
| Timeline |
| TransAlta Corp |
| China Resources Power |
TransAlta Corp and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TransAlta Corp and China Resources
The main advantage of trading using opposite TransAlta Corp and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TransAlta Corp position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| TransAlta Corp vs. Pampa Energia SA | TransAlta Corp vs. Vistra Energy Corp | TransAlta Corp vs. NRG Energy | TransAlta Corp vs. Power Assets Holdings |
| China Resources vs. NRG Energy | China Resources vs. TransAlta Corp | China Resources vs. Kenon Holdings | China Resources vs. Pampa Energia SA |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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