Correlation Between HUHUTECH International and Nippon Steel

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

Diversification Opportunities for HUHUTECH International and Nippon Steel

-0.3

Correlation Coefficient

HUHUTECH International  Nippon Steel

Very good diversification

The 3 months correlation between HUHUTECH and Nippon is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding HUHUTECH International Group and Nippon Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Steel Corp 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 Nippon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Steel Corp has no effect on the direction of HUHUTECH International i.e., HUHUTECH International and Nippon Steel go up and down completely randomly.

Pair Corralation between HUHUTECH International and Nippon Steel

Given the investment horizon of 90 days HUHUTECH International Group is expected to generate 5.11 times more return on investment than Nippon Steel. However, HUHUTECH International is 5.11 times more volatile than Nippon Steel Corp. It trades about 0.11 of its potential returns per unit of risk. Nippon Steel Corp is currently generating about 0.27 per unit of risk. If you would invest  431.00  in HUHUTECH International Group on December 23, 2024 and sell it today you would earn a total of  165.00  from holding HUHUTECH International Group or generate 38.28% return on investment over 90 days.

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

HUHUTECH International Group  vs.  Nippon Steel Corp

HUHUTECH International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HUHUTECH International Group are ranked lower than 8 (%) 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.

Nippon Steel Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Steel Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Nippon Steel showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUHUTECH International and Nippon Steel

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

The idea behind HUHUTECH International Group and Nippon Steel 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.