Correlation Between Huaneng Lancang and Aofu Environmental
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By analyzing existing cross correlation between Huaneng Lancang River and Aofu Environmental Technology, you can compare the effects of market volatilities on Huaneng Lancang and Aofu Environmental 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 Huaneng Lancang with a short position of Aofu Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaneng Lancang and Aofu Environmental.
Diversification Opportunities for Huaneng Lancang and Aofu Environmental
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Huaneng and Aofu is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Huaneng Lancang River and Aofu Environmental Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aofu Environmental and Huaneng Lancang 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 Huaneng Lancang River are associated (or correlated) with Aofu Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aofu Environmental has no effect on the direction of Huaneng Lancang i.e., Huaneng Lancang and Aofu Environmental go up and down completely randomly.
Pair Corralation between Huaneng Lancang and Aofu Environmental
Assuming the 90 days trading horizon Huaneng Lancang River is expected to under-perform the Aofu Environmental. But the stock apears to be less risky and, when comparing its historical volatility, Huaneng Lancang River is 2.71 times less risky than Aofu Environmental. The stock trades about -0.34 of its potential returns per unit of risk. The Aofu Environmental Technology is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,173 in Aofu Environmental Technology on August 29, 2024 and sell it today you would lose (33.00) from holding Aofu Environmental Technology or give up 2.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huaneng Lancang River vs. Aofu Environmental Technology
Performance |
| Timeline |
| Huaneng Lancang River |
| Aofu Environmental |
Huaneng Lancang and Aofu Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaneng Lancang and Aofu Environmental
The main advantage of trading using opposite Huaneng Lancang and Aofu Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaneng Lancang position performs unexpectedly, Aofu Environmental 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 Aofu Environmental will offset losses from the drop in Aofu Environmental's long position.| Huaneng Lancang vs. Aofu Environmental Technology | Huaneng Lancang vs. Tongxing Environmental Protection | Huaneng Lancang vs. City Development Environment | Huaneng Lancang vs. Hainan Haiqi Transportation |
| Aofu Environmental vs. Baoshan Iron Steel | Aofu Environmental vs. Shandong Gold Mining | Aofu Environmental vs. Rongsheng Petrochemical Co | Aofu Environmental vs. Inner Mongolia BaoTou |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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