Correlation Between Datang International and NRG Energy
Can any of the company-specific risk be diversified away by investing in both Datang International and NRG Energy 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 Datang International and NRG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Datang International Power and NRG Energy, you can compare the effects of market volatilities on Datang International and NRG Energy 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 Datang International with a short position of NRG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datang International and NRG Energy.
Diversification Opportunities for Datang International and NRG Energy
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Datang and NRG is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Datang International Power and NRG Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG Energy and Datang International 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 Datang International Power are associated (or correlated) with NRG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG Energy has no effect on the direction of Datang International i.e., Datang International and NRG Energy go up and down completely randomly.
Pair Corralation between Datang International and NRG Energy
If you would invest 7,616 in NRG Energy on September 6, 2024 and sell it today you would earn a total of 2,477 from holding NRG Energy or generate 32.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 1.59% |
Values | Daily Returns |
Datang International Power vs. NRG Energy
Performance |
Timeline |
Datang International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
NRG Energy |
Datang International and NRG Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Datang International and NRG Energy
The main advantage of trading using opposite Datang International and NRG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datang International position performs unexpectedly, NRG Energy 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 NRG Energy will offset losses from the drop in NRG Energy's long position.Datang International vs. Maxim Power Corp | Datang International vs. Pampa Energia SA | Datang International vs. NRG Energy | Datang International vs. Vistra Energy Corp |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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