Correlation Between CN YANGTPWR and CENTRICA ADR

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

Diversification Opportunities for CN YANGTPWR and CENTRICA ADR

-0.16

Correlation Coefficient

CN YANGTPWR  CENTRICA ADR

Good diversification

The 3 months correlation between CYZB and CENTRICA is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding CN YANGTPWR GDR and CENTRICA ADR NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTRICA ADR NEW 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 CENTRICA ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTRICA ADR NEW has no effect on the direction of CN YANGTPWR i.e., CN YANGTPWR and CENTRICA ADR go up and down completely randomly.

Pair Corralation between CN YANGTPWR and CENTRICA ADR

Assuming the 90 days trading horizon CN YANGTPWR is expected to generate 12.12 times less return on investment than CENTRICA ADR. In addition to that, CN YANGTPWR is 1.14 times more volatile than CENTRICA ADR NEW. It trades about 0.03 of its total potential returns per unit of risk. CENTRICA ADR NEW is currently generating about 0.35 per unit of volatility. If you would invest  550.00  in CENTRICA ADR NEW on September 15, 2024 and sell it today you would earn a total of  60.00  from holding CENTRICA ADR NEW or generate 10.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

CN YANGTPWR GDR  vs.  CENTRICA ADR NEW

CN YANGTPWR GDR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CN YANGTPWR GDR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CN YANGTPWR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CENTRICA ADR NEW

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CENTRICA ADR NEW are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CENTRICA ADR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CN YANGTPWR and CENTRICA ADR

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

The idea behind CN YANGTPWR GDR and CENTRICA ADR NEW 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.