Correlation Between NRG ENERGY and ANGANG STEEL

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Can any of the company-specific risk be diversified away by investing in both NRG ENERGY and ANGANG STEEL 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 NRG ENERGY and ANGANG STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRG ENERGY and ANGANG STEEL H , you can compare the effects of market volatilities on NRG ENERGY and ANGANG STEEL 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 NRG ENERGY with a short position of ANGANG STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG ENERGY and ANGANG STEEL.

Diversification Opportunities for NRG ENERGY and ANGANG STEEL

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between NRG and ANGANG is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding NRG ENERGY and ANGANG STEEL H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANGANG STEEL H and NRG ENERGY 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 NRG ENERGY are associated (or correlated) with ANGANG STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANGANG STEEL H has no effect on the direction of NRG ENERGY i.e., NRG ENERGY and ANGANG STEEL go up and down completely randomly.

Pair Corralation between NRG ENERGY and ANGANG STEEL

Assuming the 90 days trading horizon NRG ENERGY is expected to generate 0.7 times more return on investment than ANGANG STEEL. However, NRG ENERGY is 1.43 times less risky than ANGANG STEEL. It trades about 0.09 of its potential returns per unit of risk. ANGANG STEEL H is currently generating about 0.04 per unit of risk. If you would invest  8,437  in NRG ENERGY on October 9, 2024 and sell it today you would earn a total of  1,031  from holding NRG ENERGY or generate 12.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

NRG ENERGY  vs.  ANGANG STEEL H

 Performance 
       Timeline  
NRG ENERGY 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in NRG ENERGY are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NRG ENERGY unveiled solid returns over the last few months and may actually be approaching a breakup point.
ANGANG STEEL H 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in ANGANG STEEL H are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ANGANG STEEL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

NRG ENERGY and ANGANG STEEL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NRG ENERGY and ANGANG STEEL

The main advantage of trading using opposite NRG ENERGY and ANGANG STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG ENERGY position performs unexpectedly, ANGANG STEEL 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 ANGANG STEEL will offset losses from the drop in ANGANG STEEL's long position.
The idea behind NRG ENERGY and ANGANG STEEL H 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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