Correlation Between CN YANGTPWR and POLENERGIA

Can any of the company-specific risk be diversified away by investing in both CN YANGTPWR and POLENERGIA 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 POLENERGIA 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 POLENERGIA SA ZY, you can compare the effects of market volatilities on CN YANGTPWR and POLENERGIA 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 POLENERGIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN YANGTPWR and POLENERGIA.

Diversification Opportunities for CN YANGTPWR and POLENERGIA

0.08

Correlation Coefficient

CN YANGTPWR  POLENERGIA

Significant diversification

The 3 months correlation between CYZB and POLENERGIA is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding CN YANGTPWR GDR and POLENERGIA SA ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POLENERGIA SA ZY 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 POLENERGIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POLENERGIA SA ZY has no effect on the direction of CN YANGTPWR i.e., CN YANGTPWR and POLENERGIA go up and down completely randomly.

Pair Corralation between CN YANGTPWR and POLENERGIA

Assuming the 90 days trading horizon CN YANGTPWR GDR is expected to generate 1.81 times more return on investment than POLENERGIA. However, CN YANGTPWR is 1.81 times more volatile than POLENERGIA SA ZY. It trades about 0.04 of its potential returns per unit of risk. POLENERGIA SA ZY is currently generating about 0.06 per unit of risk. If you would invest  3,300  in CN YANGTPWR GDR on September 20, 2024 and sell it today you would earn a total of  200.00  from holding CN YANGTPWR GDR or generate 6.06% return on investment over 90 days.

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

CN YANGTPWR GDR  vs.  POLENERGIA SA ZY

CN YANGTPWR GDR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CN YANGTPWR GDR are ranked lower than 3 (%) 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.

POLENERGIA SA ZY

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in POLENERGIA SA ZY are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, POLENERGIA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CN YANGTPWR and POLENERGIA

The main advantage of trading using opposite CN YANGTPWR and POLENERGIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN YANGTPWR position performs unexpectedly, POLENERGIA 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 POLENERGIA will offset losses from the drop in POLENERGIA's long position.

The idea behind CN YANGTPWR GDR and POLENERGIA SA ZY 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.