Correlation Between Aya Gold and Huaneng Power
Can any of the company-specific risk be diversified away by investing in both Aya Gold and Huaneng Power 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 Aya Gold and Huaneng Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aya Gold Silver and Huaneng Power International, you can compare the effects of market volatilities on Aya Gold and Huaneng Power 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 Aya Gold with a short position of Huaneng Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aya Gold and Huaneng Power.
Diversification Opportunities for Aya Gold and Huaneng Power
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aya and Huaneng is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Aya Gold Silver and Huaneng Power International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huaneng Power Intern and Aya Gold 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 Aya Gold Silver are associated (or correlated) with Huaneng Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huaneng Power Intern has no effect on the direction of Aya Gold i.e., Aya Gold and Huaneng Power go up and down completely randomly.
Pair Corralation between Aya Gold and Huaneng Power
Assuming the 90 days trading horizon Aya Gold Silver is expected to under-perform the Huaneng Power. In addition to that, Aya Gold is 1.81 times more volatile than Huaneng Power International. It trades about -0.17 of its total potential returns per unit of risk. Huaneng Power International is currently generating about -0.08 per unit of volatility. If you would invest 52.00 in Huaneng Power International on October 14, 2024 and sell it today you would lose (5.00) from holding Huaneng Power International or give up 9.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aya Gold Silver vs. Huaneng Power International
Performance |
| Timeline |
| Aya Gold Silver |
| Huaneng Power Intern |
Aya Gold and Huaneng Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aya Gold and Huaneng Power
The main advantage of trading using opposite Aya Gold and Huaneng Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aya Gold position performs unexpectedly, Huaneng Power 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 Huaneng Power will offset losses from the drop in Huaneng Power's long position.The idea behind Aya Gold Silver and Huaneng Power International 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.| Huaneng Power vs. Forsys Metals Corp | Huaneng Power vs. Aya Gold Silver | Huaneng Power vs. Perseus Mining Limited | Huaneng Power vs. GALENA MINING LTD |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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