Correlation Between GEELY AUTOMOBILE and Huaneng Power
Can any of the company-specific risk be diversified away by investing in both GEELY AUTOMOBILE 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 GEELY AUTOMOBILE and Huaneng Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEELY AUTOMOBILE and Huaneng Power International, you can compare the effects of market volatilities on GEELY AUTOMOBILE 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 GEELY AUTOMOBILE with a short position of Huaneng Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEELY AUTOMOBILE and Huaneng Power.
Diversification Opportunities for GEELY AUTOMOBILE and Huaneng Power
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GEELY and Huaneng is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE 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 GEELY AUTOMOBILE 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 GEELY AUTOMOBILE 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 GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and Huaneng Power go up and down completely randomly.
Pair Corralation between GEELY AUTOMOBILE and Huaneng Power
Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 1.69 times more return on investment than Huaneng Power. However, GEELY AUTOMOBILE is 1.69 times more volatile than Huaneng Power International. It trades about -0.08 of its potential returns per unit of risk. Huaneng Power International is currently generating about -0.3 per unit of risk. If you would invest 181.00 in GEELY AUTOMOBILE on October 30, 2024 and sell it today you would lose (5.00) from holding GEELY AUTOMOBILE or give up 2.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
GEELY AUTOMOBILE vs. Huaneng Power International
Performance |
| Timeline |
| GEELY AUTOMOBILE |
| Huaneng Power Intern |
GEELY AUTOMOBILE and Huaneng Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEELY AUTOMOBILE and Huaneng Power
The main advantage of trading using opposite GEELY AUTOMOBILE and Huaneng Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEELY AUTOMOBILE 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.| GEELY AUTOMOBILE vs. Goosehead Insurance | GEELY AUTOMOBILE vs. ANTA SPORTS PRODUCT | GEELY AUTOMOBILE vs. Dave Busters Entertainment | GEELY AUTOMOBILE vs. Zurich Insurance Group |
| Huaneng Power vs. GigaMedia | Huaneng Power vs. Australian Agricultural | Huaneng Power vs. China Railway Construction | Huaneng Power vs. Fuji Media 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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