Correlation Between Huaneng Power and GEELY AUTOMOBILE
Can any of the company-specific risk be diversified away by investing in both Huaneng Power and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE 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 GEELY AUTOMOBILE, you can compare the effects of market volatilities on Huaneng Power and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaneng Power and GEELY AUTOMOBILE.
Diversification Opportunities for Huaneng Power and GEELY AUTOMOBILE
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Huaneng and GEELY is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Huaneng Power International and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEELY AUTOMOBILE has no effect on the direction of Huaneng Power i.e., Huaneng Power and GEELY AUTOMOBILE go up and down completely randomly.
Pair Corralation between Huaneng Power and GEELY AUTOMOBILE
Assuming the 90 days trading horizon Huaneng Power International is expected to under-perform the GEELY AUTOMOBILE. But the stock apears to be less risky and, when comparing its historical volatility, Huaneng Power International is 1.69 times less risky than GEELY AUTOMOBILE. The stock trades about -0.3 of its potential returns per unit of risk. The GEELY AUTOMOBILE is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 181.00 in GEELY AUTOMOBILE on October 30, 2024 and sell it today you would lose (5.00) from holding GEELY AUTOMOBILE or give up 2.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Huaneng Power International vs. GEELY AUTOMOBILE
Performance |
| Timeline |
| Huaneng Power Intern |
| GEELY AUTOMOBILE |
Huaneng Power and GEELY AUTOMOBILE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaneng Power and GEELY AUTOMOBILE
The main advantage of trading using opposite Huaneng Power and GEELY AUTOMOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaneng Power position performs unexpectedly, GEELY AUTOMOBILE 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 GEELY AUTOMOBILE will offset losses from the drop in GEELY AUTOMOBILE's long position.| Huaneng Power vs. GigaMedia | Huaneng Power vs. Australian Agricultural | Huaneng Power vs. China Railway Construction | Huaneng Power vs. Fuji Media Holdings |
| GEELY AUTOMOBILE vs. Goosehead Insurance | GEELY AUTOMOBILE vs. ANTA SPORTS PRODUCT | GEELY AUTOMOBILE vs. Dave Busters Entertainment | GEELY AUTOMOBILE vs. Zurich Insurance Group |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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