Correlation Between Treasury Wine and Huaneng Power

Can any of the company-specific risk be diversified away by investing in both Treasury Wine 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 Treasury Wine and Huaneng Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Treasury Wine Estates and Huaneng Power International, you can compare the effects of market volatilities on Treasury Wine 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 Treasury Wine with a short position of Huaneng Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and Huaneng Power.

Diversification Opportunities for Treasury Wine and Huaneng Power

0.0

Correlation Coefficient

Treasury Wine  Huaneng Power

Pay attention - limited upside

The 3 months correlation between Treasury and Huaneng is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates 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 Treasury Wine 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 Treasury Wine Estates 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 Treasury Wine i.e., Treasury Wine and Huaneng Power go up and down completely randomly.

Pair Corralation between Treasury Wine and Huaneng Power

If you would invest  616.00  in Treasury Wine Estates on October 22, 2024 and sell it today you would earn a total of  33.00  from holding Treasury Wine Estates or generate 5.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Treasury Wine Estates  vs.  Huaneng Power International

Treasury Wine Estates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Treasury Wine Estates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Huaneng Power Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huaneng Power International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Huaneng Power is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Treasury Wine and Huaneng Power

The main advantage of trading using opposite Treasury Wine and Huaneng Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine 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 Treasury Wine Estates 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.