Correlation Between Huadi International and HF Sinclair

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Can any of the company-specific risk be diversified away by investing in both Huadi International and HF Sinclair 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 Huadi International and HF Sinclair into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huadi International Group and HF Sinclair Corp, you can compare the effects of market volatilities on Huadi International and HF Sinclair 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 Huadi International with a short position of HF Sinclair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huadi International and HF Sinclair.

Diversification Opportunities for Huadi International and HF Sinclair

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Huadi and DINO is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Huadi International Group and HF Sinclair Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF Sinclair Corp and Huadi 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 Huadi International Group are associated (or correlated) with HF Sinclair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF Sinclair Corp has no effect on the direction of Huadi International i.e., Huadi International and HF Sinclair go up and down completely randomly.

Pair Corralation between Huadi International and HF Sinclair

Given the investment horizon of 90 days Huadi International Group is expected to generate 1.74 times more return on investment than HF Sinclair. However, Huadi International is 1.74 times more volatile than HF Sinclair Corp. It trades about -0.35 of its potential returns per unit of risk. HF Sinclair Corp is currently generating about -0.68 per unit of risk. If you would invest  200.00  in Huadi International Group on September 24, 2024 and sell it today you would lose (37.00) from holding Huadi International Group or give up 18.5% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Huadi International Group  vs.  HF Sinclair Corp

 Performance 
       Timeline  
Huadi International 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Huadi International Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
HF Sinclair Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days HF Sinclair Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Huadi International and HF Sinclair Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Huadi International and HF Sinclair

The main advantage of trading using opposite Huadi International and HF Sinclair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huadi International position performs unexpectedly, HF Sinclair 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 HF Sinclair will offset losses from the drop in HF Sinclair's long position.
The idea behind Huadi International Group and HF Sinclair Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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