Correlation Between TransAlta and Datang International
Can any of the company-specific risk be diversified away by investing in both TransAlta and Datang International 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 and Datang International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TransAlta and Datang International Power, you can compare the effects of market volatilities on TransAlta and Datang International 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 with a short position of Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of TransAlta and Datang International.
Diversification Opportunities for TransAlta and Datang International
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TransAlta and Datang is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding TransAlta and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International and TransAlta 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 are associated (or correlated) with Datang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datang International has no effect on the direction of TransAlta i.e., TransAlta and Datang International go up and down completely randomly.
Pair Corralation between TransAlta and Datang International
Assuming the 90 days horizon TransAlta is expected to under-perform the Datang International. In addition to that, TransAlta is 1.35 times more volatile than Datang International Power. It trades about -0.23 of its total potential returns per unit of risk. Datang International Power is currently generating about -0.06 per unit of volatility. If you would invest 17.00 in Datang International Power on November 2, 2024 and sell it today you would lose (1.00) from holding Datang International Power or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TransAlta vs. Datang International Power
Performance |
| Timeline |
| TransAlta |
| Datang International |
TransAlta and Datang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TransAlta and Datang International
The main advantage of trading using opposite TransAlta and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TransAlta position performs unexpectedly, Datang International 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 Datang International will offset losses from the drop in Datang International's long position.| TransAlta vs. CN YANGTPWR GDR | TransAlta vs. Siemens Energy AG | TransAlta vs. Vistra Corp | TransAlta vs. Datang International Power |
| Datang International vs. Columbia Sportswear | Datang International vs. Playtech plc | Datang International vs. Kaiser Aluminum | Datang International vs. Fortescue Metals Group |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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