Correlation Between HUHUTECH International and Universal Stainless

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

Diversification Opportunities for HUHUTECH International and Universal Stainless

-0.05

Correlation Coefficient

HUHUTECH International  Universal Stainless

Good diversification

The 3 months correlation between HUHUTECH and Universal is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding HUHUTECH International Group and Universal Stainless Alloy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Stainless Alloy 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 Universal Stainless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Stainless Alloy has no effect on the direction of HUHUTECH International i.e., HUHUTECH International and Universal Stainless go up and down completely randomly.

Pair Corralation between HUHUTECH International and Universal Stainless

Given the investment horizon of 90 days HUHUTECH International Group is expected to generate 15.76 times more return on investment than Universal Stainless. However, HUHUTECH International is 15.76 times more volatile than Universal Stainless Alloy. It trades about 0.07 of its potential returns per unit of risk. Universal Stainless Alloy is currently generating about -0.04 per unit of risk. If you would invest  416.00  in HUHUTECH International Group on October 7, 2024 and sell it today you would earn a total of  40.00  from holding HUHUTECH International Group or generate 9.62% 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.  Universal Stainless Alloy

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.

Universal Stainless Alloy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Stainless Alloy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Universal Stainless may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HUHUTECH International and Universal Stainless

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

The idea behind HUHUTECH International Group and Universal Stainless Alloy 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.