Correlation Between Huaneng Power and INVITATION HOMES
Can any of the company-specific risk be diversified away by investing in both Huaneng Power and INVITATION HOMES 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 INVITATION HOMES 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 INVITATION HOMES DL, you can compare the effects of market volatilities on Huaneng Power and INVITATION HOMES 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 INVITATION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaneng Power and INVITATION HOMES.
Diversification Opportunities for Huaneng Power and INVITATION HOMES
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Huaneng and INVITATION is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Huaneng Power International and INVITATION HOMES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVITATION HOMES 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 INVITATION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVITATION HOMES has no effect on the direction of Huaneng Power i.e., Huaneng Power and INVITATION HOMES go up and down completely randomly.
Pair Corralation between Huaneng Power and INVITATION HOMES
Assuming the 90 days trading horizon Huaneng Power International is expected to generate 3.06 times more return on investment than INVITATION HOMES. However, Huaneng Power is 3.06 times more volatile than INVITATION HOMES DL. It trades about 0.06 of its potential returns per unit of risk. INVITATION HOMES DL is currently generating about 0.01 per unit of risk. If you would invest 28.00 in Huaneng Power International on September 28, 2024 and sell it today you would earn a total of 22.00 from holding Huaneng Power International or generate 78.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huaneng Power International vs. INVITATION HOMES DL
Performance |
| Timeline |
| Huaneng Power Intern |
| INVITATION HOMES |
Huaneng Power and INVITATION HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaneng Power and INVITATION HOMES
The main advantage of trading using opposite Huaneng Power and INVITATION HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaneng Power position performs unexpectedly, INVITATION HOMES 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 INVITATION HOMES will offset losses from the drop in INVITATION HOMES's long position.| Huaneng Power vs. INVITATION HOMES DL | Huaneng Power vs. Charter Communications | Huaneng Power vs. SBA Communications Corp | Huaneng Power vs. Global Ship Lease |
| INVITATION HOMES vs. AvalonBay Communities | INVITATION HOMES vs. UDR Inc | INVITATION HOMES vs. Sun Communities | INVITATION HOMES vs. Essex Property Trust |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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