Correlation Between Fuji Media and Huaneng Power
Can any of the company-specific risk be diversified away by investing in both Fuji Media 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 Fuji Media and Huaneng Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fuji Media Holdings and Huaneng Power International, you can compare the effects of market volatilities on Fuji Media 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 Fuji Media with a short position of Huaneng Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuji Media and Huaneng Power.
Diversification Opportunities for Fuji Media and Huaneng Power
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fuji and Huaneng is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Fuji Media Holdings 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 Fuji Media 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 Fuji Media Holdings 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 Fuji Media i.e., Fuji Media and Huaneng Power go up and down completely randomly.
Pair Corralation between Fuji Media and Huaneng Power
Assuming the 90 days trading horizon Fuji Media Holdings is expected to generate 2.21 times more return on investment than Huaneng Power. However, Fuji Media is 2.21 times more volatile than Huaneng Power International. It trades about 0.33 of its potential returns per unit of risk. Huaneng Power International is currently generating about 0.01 per unit of risk. If you would invest 1,030 in Fuji Media Holdings on November 7, 2024 and sell it today you would earn a total of 310.00 from holding Fuji Media Holdings or generate 30.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fuji Media Holdings vs. Huaneng Power International
Performance |
| Timeline |
| Fuji Media Holdings |
| Huaneng Power Intern |
Fuji Media and Huaneng Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fuji Media and Huaneng Power
The main advantage of trading using opposite Fuji Media and Huaneng Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuji Media 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.| Fuji Media vs. VELA TECHNOLPLC LS 0001 | Fuji Media vs. NXP Semiconductors NV | Fuji Media vs. Playtech plc | Fuji Media vs. Genscript Biotech |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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