Correlation Between Huaneng Power and UNIVERSAL MUSIC
Can any of the company-specific risk be diversified away by investing in both Huaneng Power and UNIVERSAL MUSIC 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 UNIVERSAL MUSIC 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 UNIVERSAL MUSIC GROUP, you can compare the effects of market volatilities on Huaneng Power and UNIVERSAL MUSIC 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 UNIVERSAL MUSIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaneng Power and UNIVERSAL MUSIC.
Diversification Opportunities for Huaneng Power and UNIVERSAL MUSIC
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Huaneng and UNIVERSAL is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Huaneng Power International and UNIVERSAL MUSIC GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVERSAL MUSIC GROUP 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 UNIVERSAL MUSIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVERSAL MUSIC GROUP has no effect on the direction of Huaneng Power i.e., Huaneng Power and UNIVERSAL MUSIC go up and down completely randomly.
Pair Corralation between Huaneng Power and UNIVERSAL MUSIC
Assuming the 90 days trading horizon Huaneng Power is expected to generate 4.74 times less return on investment than UNIVERSAL MUSIC. In addition to that, Huaneng Power is 1.17 times more volatile than UNIVERSAL MUSIC GROUP. It trades about 0.06 of its total potential returns per unit of risk. UNIVERSAL MUSIC GROUP is currently generating about 0.34 per unit of volatility. If you would invest 2,420 in UNIVERSAL MUSIC GROUP on November 6, 2024 and sell it today you would earn a total of 277.00 from holding UNIVERSAL MUSIC GROUP or generate 11.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huaneng Power International vs. UNIVERSAL MUSIC GROUP
Performance |
| Timeline |
| Huaneng Power Intern |
| UNIVERSAL MUSIC GROUP |
Huaneng Power and UNIVERSAL MUSIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaneng Power and UNIVERSAL MUSIC
The main advantage of trading using opposite Huaneng Power and UNIVERSAL MUSIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaneng Power position performs unexpectedly, UNIVERSAL MUSIC 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 UNIVERSAL MUSIC will offset losses from the drop in UNIVERSAL MUSIC's long position.| Huaneng Power vs. MGIC INVESTMENT | Huaneng Power vs. Apollo Investment Corp | Huaneng Power vs. Gold Road Resources | Huaneng Power vs. Television Broadcasts Limited |
| UNIVERSAL MUSIC vs. SIVERS SEMICONDUCTORS AB | UNIVERSAL MUSIC vs. NorAm Drilling AS | UNIVERSAL MUSIC vs. Volkswagen AG | UNIVERSAL MUSIC vs. Darden Restaurants |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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