Correlation Between Huaneng Power and VULCAN MATERIALS
Can any of the company-specific risk be diversified away by investing in both Huaneng Power and VULCAN MATERIALS 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 VULCAN MATERIALS 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 VULCAN MATERIALS, you can compare the effects of market volatilities on Huaneng Power and VULCAN MATERIALS 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 VULCAN MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaneng Power and VULCAN MATERIALS.
Diversification Opportunities for Huaneng Power and VULCAN MATERIALS
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Huaneng and VULCAN is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Huaneng Power International and VULCAN MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VULCAN MATERIALS 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 VULCAN MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VULCAN MATERIALS has no effect on the direction of Huaneng Power i.e., Huaneng Power and VULCAN MATERIALS go up and down completely randomly.
Pair Corralation between Huaneng Power and VULCAN MATERIALS
Assuming the 90 days trading horizon Huaneng Power is expected to generate 16.46 times less return on investment than VULCAN MATERIALS. In addition to that, Huaneng Power is 1.52 times more volatile than VULCAN MATERIALS. It trades about 0.01 of its total potential returns per unit of risk. VULCAN MATERIALS is currently generating about 0.21 per unit of volatility. If you would invest 24,800 in VULCAN MATERIALS on November 7, 2024 and sell it today you would earn a total of 1,400 from holding VULCAN MATERIALS or generate 5.65% 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. VULCAN MATERIALS
Performance |
| Timeline |
| Huaneng Power Intern |
| VULCAN MATERIALS |
Huaneng Power and VULCAN MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaneng Power and VULCAN MATERIALS
The main advantage of trading using opposite Huaneng Power and VULCAN MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaneng Power position performs unexpectedly, VULCAN MATERIALS 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 VULCAN MATERIALS will offset losses from the drop in VULCAN MATERIALS's long position.| Huaneng Power vs. China Resources Power | Huaneng Power vs. NRG Energy | Huaneng Power vs. Superior Plus Corp | Huaneng Power vs. Origin Agritech |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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