Correlation Between X FAB and Huaneng Power
Can any of the company-specific risk be diversified away by investing in both X FAB and Huaneng 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 X FAB and Huaneng Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X FAB Silicon Foundries and Huaneng Power International, you can compare the effects of market volatilities on X FAB and Huaneng 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 X FAB with a short position of Huaneng Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Huaneng Power.
Diversification Opportunities for X FAB and Huaneng Power
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between XFB and Huaneng is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Huaneng Power International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huaneng Power Intern and X FAB 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 X FAB Silicon Foundries are associated (or correlated) with Huaneng Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huaneng Power Intern has no effect on the direction of X FAB i.e., X FAB and Huaneng Power go up and down completely randomly.
Pair Corralation between X FAB and Huaneng Power
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.6 times more return on investment than Huaneng Power. However, X FAB is 1.6 times more volatile than Huaneng Power International. It trades about -0.01 of its potential returns per unit of risk. Huaneng Power International is currently generating about -0.08 per unit of risk. If you would invest 537.00 in X FAB Silicon Foundries on October 14, 2024 and sell it today you would lose (27.00) from holding X FAB Silicon Foundries or give up 5.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Huaneng Power International
Performance |
| Timeline |
| X FAB Silicon |
| Huaneng Power Intern |
X FAB and Huaneng Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Huaneng Power
The main advantage of trading using opposite X FAB and Huaneng Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Huaneng 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 Huaneng Power will offset losses from the drop in Huaneng Power's long position.| X FAB vs. CENTURIA OFFICE REIT | X FAB vs. 24SEVENOFFICE GROUP AB | X FAB vs. NURAN WIRELESS INC | X FAB vs. INDO RAMA SYNTHETIC |
| Huaneng Power vs. Forsys Metals Corp | Huaneng Power vs. Aya Gold Silver | Huaneng Power vs. Perseus Mining Limited | Huaneng Power vs. GALENA MINING LTD |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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