Correlation Between Huaneng Power and EMBARK EDUCATION
Can any of the company-specific risk be diversified away by investing in both Huaneng Power and EMBARK EDUCATION 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 EMBARK EDUCATION 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 EMBARK EDUCATION LTD, you can compare the effects of market volatilities on Huaneng Power and EMBARK EDUCATION 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 EMBARK EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaneng Power and EMBARK EDUCATION.
Diversification Opportunities for Huaneng Power and EMBARK EDUCATION
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Huaneng and EMBARK is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Huaneng Power International and EMBARK EDUCATION LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMBARK EDUCATION LTD 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 EMBARK EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMBARK EDUCATION LTD has no effect on the direction of Huaneng Power i.e., Huaneng Power and EMBARK EDUCATION go up and down completely randomly.
Pair Corralation between Huaneng Power and EMBARK EDUCATION
Assuming the 90 days trading horizon Huaneng Power International is expected to generate 2.91 times more return on investment than EMBARK EDUCATION. However, Huaneng Power is 2.91 times more volatile than EMBARK EDUCATION LTD. It trades about 0.04 of its potential returns per unit of risk. EMBARK EDUCATION LTD is currently generating about 0.05 per unit of risk. If you would invest 29.00 in Huaneng Power International on October 28, 2024 and sell it today you would earn a total of 18.00 from holding Huaneng Power International or generate 62.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Huaneng Power International vs. EMBARK EDUCATION LTD
Performance |
| Timeline |
| Huaneng Power Intern |
| EMBARK EDUCATION LTD |
Huaneng Power and EMBARK EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaneng Power and EMBARK EDUCATION
The main advantage of trading using opposite Huaneng Power and EMBARK EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaneng Power position performs unexpectedly, EMBARK EDUCATION 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 EMBARK EDUCATION will offset losses from the drop in EMBARK EDUCATION's long position.| Huaneng Power vs. SEI INVESTMENTS | Huaneng Power vs. MACOM Technology Solutions | Huaneng Power vs. MGIC INVESTMENT | Huaneng Power vs. REINET INVESTMENTS SCA |
| EMBARK EDUCATION vs. REINET INVESTMENTS SCA | EMBARK EDUCATION vs. Fast Retailing Co | EMBARK EDUCATION vs. Ross Stores | EMBARK EDUCATION vs. Guangdong Investment Limited |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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