Correlation Between Huaneng Power and Pampa Energia
Can any of the company-specific risk be diversified away by investing in both Huaneng Power and Pampa Energia 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 Pampa Energia 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 Pampa Energia SA, you can compare the effects of market volatilities on Huaneng Power and Pampa Energia 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 Pampa Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaneng Power and Pampa Energia.
Diversification Opportunities for Huaneng Power and Pampa Energia
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Huaneng and Pampa is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Huaneng Power International and Pampa Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Energia SA 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 Pampa Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Energia SA has no effect on the direction of Huaneng Power i.e., Huaneng Power and Pampa Energia go up and down completely randomly.
Pair Corralation between Huaneng Power and Pampa Energia
Assuming the 90 days horizon Huaneng Power International is expected to generate 7.64 times more return on investment than Pampa Energia. However, Huaneng Power is 7.64 times more volatile than Pampa Energia SA. It trades about 0.1 of its potential returns per unit of risk. Pampa Energia SA is currently generating about 0.1 per unit of risk. If you would invest 44.00 in Huaneng Power International on August 27, 2024 and sell it today you would earn a total of 6.00 from holding Huaneng Power International or generate 13.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 81.85% |
| Values | Daily Returns |
Huaneng Power International vs. Pampa Energia SA
Performance |
| Timeline |
| Huaneng Power Intern |
| Pampa Energia SA |
Huaneng Power and Pampa Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaneng Power and Pampa Energia
The main advantage of trading using opposite Huaneng Power and Pampa Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaneng Power position performs unexpectedly, Pampa Energia 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 Pampa Energia will offset losses from the drop in Pampa Energia's long position.| Huaneng Power vs. Maxim Power Corp | Huaneng Power vs. Pampa Energia SA | Huaneng Power vs. NRG Energy | Huaneng Power vs. Vistra Energy Corp |
| Pampa Energia vs. Grupo Financiero Galicia | Pampa Energia vs. Banco Macro SA | Pampa Energia vs. Empresa Distribuidora y | Pampa Energia vs. Transportadora de Gas |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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