Correlation Between China Railway and Huaneng Power
Can any of the company-specific risk be diversified away by investing in both China Railway 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 China Railway and Huaneng Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Railway Construction and Huaneng Power International, you can compare the effects of market volatilities on China Railway 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 China Railway with a short position of Huaneng Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Huaneng Power.
Diversification Opportunities for China Railway and Huaneng Power
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Huaneng is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Construction 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 China Railway 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 China Railway Construction 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 China Railway i.e., China Railway and Huaneng Power go up and down completely randomly.
Pair Corralation between China Railway and Huaneng Power
If you would invest 49.00 in Huaneng Power International on November 7, 2024 and sell it today you would earn a total of 0.00 from holding Huaneng Power International or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Railway Construction vs. Huaneng Power International
Performance |
| Timeline |
| China Railway Constr |
| Huaneng Power Intern |
China Railway and Huaneng Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Huaneng Power
The main advantage of trading using opposite China Railway and Huaneng Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway 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.| China Railway vs. HK Electric Investments | China Railway vs. Scandinavian Tobacco Group | China Railway vs. OPKO HEALTH | China Railway vs. HEALTHSTREAM |
| Huaneng Power vs. China Resources Power | Huaneng Power vs. NRG Energy | Huaneng Power vs. Superior Plus Corp | Huaneng Power vs. Origin Agritech |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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