Correlation Between Huaneng Power and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both Huaneng Power and Algonquin 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 Huaneng Power and Algonquin Power 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 Algonquin Power Utilities, you can compare the effects of market volatilities on Huaneng Power and Algonquin 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 Huaneng Power with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaneng Power and Algonquin Power.
Diversification Opportunities for Huaneng Power and Algonquin Power
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Huaneng and Algonquin is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Huaneng Power International and Algonquin Power Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algonquin Power Utilities 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 Algonquin Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algonquin Power Utilities has no effect on the direction of Huaneng Power i.e., Huaneng Power and Algonquin Power go up and down completely randomly.
Pair Corralation between Huaneng Power and Algonquin Power
Assuming the 90 days trading horizon Huaneng Power International is expected to generate 1.37 times more return on investment than Algonquin Power. However, Huaneng Power is 1.37 times more volatile than Algonquin Power Utilities. It trades about 0.15 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about -0.28 per unit of risk. If you would invest 48.00 in Huaneng Power International on September 24, 2024 and sell it today you would earn a total of 3.00 from holding Huaneng Power International or generate 6.25% 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. Algonquin Power Utilities
Performance |
| Timeline |
| Huaneng Power Intern |
| Algonquin Power Utilities |
Huaneng Power and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaneng Power and Algonquin Power
The main advantage of trading using opposite Huaneng Power and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaneng Power position performs unexpectedly, Algonquin 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 Algonquin Power will offset losses from the drop in Algonquin Power's long position.| Huaneng Power vs. Orsted AS | Huaneng Power vs. EDP Renovveis SA | Huaneng Power vs. CGN Power Co | Huaneng Power vs. Power Assets Holdings |
| Algonquin Power vs. Orsted AS | Algonquin Power vs. EDP Renovveis SA | Algonquin Power vs. CGN Power Co | Algonquin Power vs. Huaneng Power International |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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