Correlation Between TransAlta and CN YANGTPWR
Can any of the company-specific risk be diversified away by investing in both TransAlta and CN YANGTPWR 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 CN YANGTPWR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TransAlta and CN YANGTPWR GDR, you can compare the effects of market volatilities on TransAlta and CN YANGTPWR 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 CN YANGTPWR. Check out your portfolio center. Please also check ongoing floating volatility patterns of TransAlta and CN YANGTPWR.
Diversification Opportunities for TransAlta and CN YANGTPWR
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TransAlta and CYZB is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding TransAlta and CN YANGTPWR GDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN YANGTPWR GDR 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 CN YANGTPWR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN YANGTPWR GDR has no effect on the direction of TransAlta i.e., TransAlta and CN YANGTPWR go up and down completely randomly.
Pair Corralation between TransAlta and CN YANGTPWR
Assuming the 90 days horizon TransAlta is expected to under-perform the CN YANGTPWR. But the stock apears to be less risky and, when comparing its historical volatility, TransAlta is 5.61 times less risky than CN YANGTPWR. The stock trades about -0.01 of its potential returns per unit of risk. The CN YANGTPWR GDR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,540 in CN YANGTPWR GDR on October 20, 2024 and sell it today you would earn a total of 60.00 from holding CN YANGTPWR GDR or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TransAlta vs. CN YANGTPWR GDR
Performance |
| Timeline |
| TransAlta |
| CN YANGTPWR GDR |
TransAlta and CN YANGTPWR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TransAlta and CN YANGTPWR
The main advantage of trading using opposite TransAlta and CN YANGTPWR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TransAlta position performs unexpectedly, CN YANGTPWR 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 CN YANGTPWR will offset losses from the drop in CN YANGTPWR's long position.| TransAlta vs. CN YANGTPWR GDR | TransAlta vs. Siemens Energy AG | TransAlta vs. Vistra Corp | TransAlta vs. Datang International Power |
| CN YANGTPWR vs. Siemens Energy AG | CN YANGTPWR vs. Vistra Corp | CN YANGTPWR vs. Datang International Power | CN YANGTPWR vs. Contact Energy Limited |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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