Correlation Between Orsted AS and Huaneng Power
Can any of the company-specific risk be diversified away by investing in both Orsted AS 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 Orsted AS and Huaneng Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orsted AS and Huaneng Power International, you can compare the effects of market volatilities on Orsted AS 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 Orsted AS with a short position of Huaneng Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orsted AS and Huaneng Power.
Diversification Opportunities for Orsted AS and Huaneng Power
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Orsted and Huaneng is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS 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 Orsted AS 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 Orsted AS 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 Orsted AS i.e., Orsted AS and Huaneng Power go up and down completely randomly.
Pair Corralation between Orsted AS and Huaneng Power
Assuming the 90 days horizon Orsted AS is expected to under-perform the Huaneng Power. But the stock apears to be less risky and, when comparing its historical volatility, Orsted AS is 1.15 times less risky than Huaneng Power. The stock trades about -0.41 of its potential returns per unit of risk. The Huaneng Power International is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 48.00 in Huaneng Power International on September 24, 2024 and sell it today you would earn a total of 3.00 from holding Huaneng Power International or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orsted AS vs. Huaneng Power International
Performance |
| Timeline |
| Orsted AS |
| Huaneng Power Intern |
Orsted AS and Huaneng Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orsted AS and Huaneng Power
The main advantage of trading using opposite Orsted AS and Huaneng Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orsted AS 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.| Orsted AS vs. EDP Renovveis SA | Orsted AS vs. CGN Power Co | Orsted AS vs. Huaneng Power International | Orsted AS vs. Power Assets Holdings |
| Huaneng Power vs. Orsted AS | Huaneng Power vs. EDP Renovveis SA | Huaneng Power vs. CGN Power Co | Huaneng Power vs. Power Assets Holdings |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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