Correlation Between Pampa Energia and Datang International

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

Diversification Opportunities for Pampa Energia and Datang International

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Pampa and Datang is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Pampa Energia SA and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International and Pampa Energia 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 Pampa Energia SA are associated (or correlated) with Datang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datang International has no effect on the direction of Pampa Energia i.e., Pampa Energia and Datang International go up and down completely randomly.

Pair Corralation between Pampa Energia and Datang International

If you would invest  5,869  in Pampa Energia SA on September 11, 2024 and sell it today you would earn a total of  2,917  from holding Pampa Energia SA or generate 49.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy1.59%
ValuesDaily Returns

Pampa Energia SA  vs.  Datang International Power

 Performance 
       Timeline  
Pampa Energia SA 

Risk-Adjusted Performance

27 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Pampa Energia SA are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Pampa Energia displayed solid returns over the last few months and may actually be approaching a breakup point.
Datang International 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Datang International Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Datang International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pampa Energia and Datang International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pampa Energia and Datang International

The main advantage of trading using opposite Pampa Energia and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pampa Energia position performs unexpectedly, Datang International 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 Datang International will offset losses from the drop in Datang International's long position.
The idea behind Pampa Energia SA and Datang International Power 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.
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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