Correlation Between Huaneng Power and Power Assets
Can any of the company-specific risk be diversified away by investing in both Huaneng Power and Power Assets 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 Huaneng Power and Power Assets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huaneng Power International and Power Assets Holdings, you can compare the effects of market volatilities on Huaneng Power and Power Assets 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 Power with a short position of Power Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaneng Power and Power Assets.
Diversification Opportunities for Huaneng Power and Power Assets
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Huaneng and Power is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Huaneng Power International and Power Assets Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Assets Holdings and Huaneng Power 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 Power International are associated (or correlated) with Power Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Assets Holdings has no effect on the direction of Huaneng Power i.e., Huaneng Power and Power Assets go up and down completely randomly.
Pair Corralation between Huaneng Power and Power Assets
Assuming the 90 days horizon Huaneng Power International is expected to generate 9.87 times more return on investment than Power Assets. However, Huaneng Power is 9.87 times more volatile than Power Assets Holdings. It trades about 0.1 of its potential returns per unit of risk. Power Assets Holdings is currently generating about 0.04 per unit of risk. If you would invest 29.00 in Huaneng Power International on August 24, 2024 and sell it today you would earn a total of 21.00 from holding Huaneng Power International or generate 72.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.82% |
| Values | Daily Returns |
Huaneng Power International vs. Power Assets Holdings
Performance |
| Timeline |
| Huaneng Power Intern |
| Power Assets Holdings |
Huaneng Power and Power Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaneng Power and Power Assets
The main advantage of trading using opposite Huaneng Power and Power Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaneng Power position performs unexpectedly, Power Assets 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 Power Assets will offset losses from the drop in Power Assets' long position.| Huaneng Power vs. Powertap Hydrogen Capital | Huaneng Power vs. Clearway Energy | Huaneng Power vs. Fusion Fuel Green | Huaneng Power vs. Orsted AS ADR |
| Power Assets vs. Southern Company Series | Power Assets vs. Southern Co | Power Assets vs. Talen Energy | Power Assets vs. CMS Energy Corp |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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