Correlation Between Vistra Corp and CN YANGTPWR

Can any of the company-specific risk be diversified away by investing in both Vistra Corp 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 Vistra Corp and CN YANGTPWR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vistra Corp and CN YANGTPWR GDR, you can compare the effects of market volatilities on Vistra Corp 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 Vistra Corp with a short position of CN YANGTPWR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vistra Corp and CN YANGTPWR.

Diversification Opportunities for Vistra Corp and CN YANGTPWR

-0.21

Correlation Coefficient

Vistra Corp  CN YANGTPWR

Very good diversification

The 3 months correlation between Vistra and CYZB is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Vistra Corp 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 Vistra 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 Vistra Corp 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 Vistra Corp i.e., Vistra Corp and CN YANGTPWR go up and down completely randomly.

Pair Corralation between Vistra Corp and CN YANGTPWR

Assuming the 90 days horizon Vistra Corp is expected to generate 1.46 times more return on investment than CN YANGTPWR. However, Vistra Corp is 1.46 times more volatile than CN YANGTPWR GDR. It trades about 0.12 of its potential returns per unit of risk. CN YANGTPWR GDR is currently generating about 0.05 per unit of risk. If you would invest  2,128  in Vistra Corp on September 19, 2024 and sell it today you would earn a total of  10,772  from holding Vistra Corp or generate 506.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Vistra Corp  vs.  CN YANGTPWR GDR

Vistra Corp

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vistra Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vistra Corp reported solid returns over the last few months and may actually be approaching a breakup point.

CN YANGTPWR GDR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CN YANGTPWR GDR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CN YANGTPWR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vistra Corp and CN YANGTPWR

The main advantage of trading using opposite Vistra Corp and CN YANGTPWR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vistra Corp 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.

The idea behind Vistra Corp and CN YANGTPWR GDR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.