Correlation Between Huadi International and Sabre Corpo

Can any of the company-specific risk be diversified away by investing in both Huadi International and Sabre Corpo 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 Sabre Corpo 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 Sabre Corpo, you can compare the effects of market volatilities on Huadi International and Sabre Corpo 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 Sabre Corpo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huadi International and Sabre Corpo.

Diversification Opportunities for Huadi International and Sabre Corpo

-0.37

Correlation Coefficient

Huadi International  Sabre Corpo

Very good diversification

The 3 months correlation between Huadi and Sabre is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Huadi International Group and Sabre Corpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Corpo 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 Sabre Corpo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Corpo has no effect on the direction of Huadi International i.e., Huadi International and Sabre Corpo go up and down completely randomly.

Pair Corralation between Huadi International and Sabre Corpo

Given the investment horizon of 90 days Huadi International Group is expected to under-perform the Sabre Corpo. But the stock apears to be less risky and, when comparing its historical volatility, Huadi International Group is 1.12 times less risky than Sabre Corpo. The stock trades about -0.29 of its potential returns per unit of risk. The Sabre Corpo is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  379.00  in Sabre Corpo on September 19, 2024 and sell it today you would earn a total of  17.00  from holding Sabre Corpo or generate 4.49% return on investment over 90 days.

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

Huadi International Group  vs.  Sabre Corpo

Huadi International

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Sabre Corpo

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sabre Corpo are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Sabre Corpo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Huadi International and Sabre Corpo

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

The idea behind Huadi International Group and Sabre Corpo 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.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.