Correlation Between Edison International and Huaneng Power
Can any of the company-specific risk be diversified away by investing in both Edison International 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 Edison International and Huaneng Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edison International and Huaneng Power International, you can compare the effects of market volatilities on Edison International 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 Edison International with a short position of Huaneng Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edison International and Huaneng Power.
Diversification Opportunities for Edison International and Huaneng Power
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Edison and Huaneng is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Edison International 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 Edison International 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 Edison International 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 Edison International i.e., Edison International and Huaneng Power go up and down completely randomly.
Pair Corralation between Edison International and Huaneng Power
If you would invest 6,871 in Edison International on January 20, 2024 and sell it today you would earn a total of 122.00 from holding Edison International or generate 1.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Edison International vs. Huaneng Power International
Performance |
| Timeline |
| Edison International |
| Huaneng Power Intern |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Edison International and Huaneng Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edison International and Huaneng Power
The main advantage of trading using opposite Edison International and Huaneng Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edison International 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.The idea behind Edison International and Huaneng Power International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Huaneng Power vs. Natural Alternatives International | Huaneng Power vs. Grocery Outlet Holding | Huaneng Power vs. Upper Street Marketing | Huaneng Power vs. Kite Realty 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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