Correlation Between MACOM Technology and Huaneng Power
Can any of the company-specific risk be diversified away by investing in both MACOM Technology 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 MACOM Technology and Huaneng Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and Huaneng Power International, you can compare the effects of market volatilities on MACOM Technology 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 MACOM Technology with a short position of Huaneng Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Huaneng Power.
Diversification Opportunities for MACOM Technology and Huaneng Power
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MACOM and Huaneng is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions 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 MACOM Technology 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 MACOM Technology Solutions 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 MACOM Technology i.e., MACOM Technology and Huaneng Power go up and down completely randomly.
Pair Corralation between MACOM Technology and Huaneng Power
Assuming the 90 days horizon MACOM Technology Solutions is expected to generate 1.95 times more return on investment than Huaneng Power. However, MACOM Technology is 1.95 times more volatile than Huaneng Power International. It trades about 0.21 of its potential returns per unit of risk. Huaneng Power International is currently generating about -0.31 per unit of risk. If you would invest 12,700 in MACOM Technology Solutions on October 29, 2024 and sell it today you would earn a total of 1,000.00 from holding MACOM Technology Solutions or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Huaneng Power International
Performance |
| Timeline |
| MACOM Technology Sol |
| Huaneng Power Intern |
MACOM Technology and Huaneng Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Huaneng Power
The main advantage of trading using opposite MACOM Technology and Huaneng Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology 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.| MACOM Technology vs. Harmony Gold Mining | MACOM Technology vs. GALENA MINING LTD | MACOM Technology vs. Perseus Mining Limited | MACOM Technology vs. ARDAGH METAL PACDL 0001 |
| Huaneng Power vs. VULCAN MATERIALS | Huaneng Power vs. Siamgas And Petrochemicals | Huaneng Power vs. The Trade Desk | Huaneng Power vs. Sumitomo Rubber Industries |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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