Correlation Between HUHUTECH International and Barnes

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

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

Diversification Opportunities for HUHUTECH International and Barnes

0.03

Correlation Coefficient

HUHUTECH International  Barnes

Significant diversification

The 3 months correlation between HUHUTECH and Barnes is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding HUHUTECH International Group and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group and HUHUTECH 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 HUHUTECH International Group are associated (or correlated) with Barnes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Group has no effect on the direction of HUHUTECH International i.e., HUHUTECH International and Barnes go up and down completely randomly.

Pair Corralation between HUHUTECH International and Barnes

Given the investment horizon of 90 days HUHUTECH International Group is expected to generate 41.26 times more return on investment than Barnes. However, HUHUTECH International is 41.26 times more volatile than Barnes Group. It trades about 0.06 of its potential returns per unit of risk. Barnes Group is currently generating about 0.24 per unit of risk. 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

HUHUTECH International Group  vs.  Barnes Group

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 weak technical indicators, HUHUTECH International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Barnes Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barnes Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Barnes is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HUHUTECH International and Barnes

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

The idea behind HUHUTECH International Group and Barnes 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.