Correlation Between Global Ship and Huaneng Power
Can any of the company-specific risk be diversified away by investing in both Global Ship 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 Global Ship and Huaneng Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and Huaneng Power International, you can compare the effects of market volatilities on Global Ship 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 Global Ship with a short position of Huaneng Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Huaneng Power.
Diversification Opportunities for Global Ship and Huaneng Power
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Huaneng is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease 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 Global Ship 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 Global Ship Lease 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 Global Ship i.e., Global Ship and Huaneng Power go up and down completely randomly.
Pair Corralation between Global Ship and Huaneng Power
Assuming the 90 days horizon Global Ship is expected to generate 1.73 times less return on investment than Huaneng Power. But when comparing it to its historical volatility, Global Ship Lease is 2.26 times less risky than Huaneng Power. It trades about 0.05 of its potential returns per unit of risk. Huaneng Power International is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 32.00 in Huaneng Power International on September 29, 2024 and sell it today you would earn a total of 19.00 from holding Huaneng Power International or generate 59.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. Huaneng Power International
Performance |
| Timeline |
| Global Ship Lease |
| Huaneng Power Intern |
Global Ship and Huaneng Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Huaneng Power
The main advantage of trading using opposite Global Ship and Huaneng Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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.| Global Ship vs. EAGLE MATERIALS | Global Ship vs. SANOK RUBBER ZY | Global Ship vs. Rayonier Advanced Materials | Global Ship vs. VIRG NATL BANKSH |
| Huaneng Power vs. Orsted AS | Huaneng Power vs. EDP Renovveis SA | Huaneng Power vs. Power Assets Holdings | Huaneng Power vs. China Resources Power |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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