Correlation Between Babcock Wilcox and HUHUTECH International

Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and HUHUTECH International 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 Babcock Wilcox and HUHUTECH International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Babcock Wilcox Enterprises and HUHUTECH International Group, you can compare the effects of market volatilities on Babcock Wilcox and HUHUTECH International 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 Babcock Wilcox with a short position of HUHUTECH International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and HUHUTECH International.

Diversification Opportunities for Babcock Wilcox and HUHUTECH International

-0.27

Correlation Coefficient

Babcock Wilcox  HUHUTECH International

Very good diversification

The 3 months correlation between Babcock and HUHUTECH is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and HUHUTECH International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUHUTECH International and Babcock Wilcox 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 Babcock Wilcox Enterprises are associated (or correlated) with HUHUTECH International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUHUTECH International has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and HUHUTECH International go up and down completely randomly.

Pair Corralation between Babcock Wilcox and HUHUTECH International

Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to under-perform the HUHUTECH International. In addition to that, Babcock Wilcox is 1.41 times more volatile than HUHUTECH International Group. It trades about -0.06 of its total potential returns per unit of risk. HUHUTECH International Group is currently generating about 0.06 per unit of volatility. If you would invest  424.00  in HUHUTECH International Group on October 6, 2024 and sell it today you would earn a total of  32.00  from holding HUHUTECH International Group or generate 7.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Babcock Wilcox Enterprises  vs.  HUHUTECH International Group

Babcock Wilcox Enter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Babcock Wilcox Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

HUHUTECH International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HUHUTECH International Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical indicators, HUHUTECH International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Babcock Wilcox and HUHUTECH International

The main advantage of trading using opposite Babcock Wilcox and HUHUTECH International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, HUHUTECH International 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 HUHUTECH International will offset losses from the drop in HUHUTECH International's long position.

The idea behind Babcock Wilcox Enterprises and HUHUTECH International Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.