Correlation Between Nucor Corp and Huadi International
Can any of the company-specific risk be diversified away by investing in both Nucor Corp and Huadi International 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 Nucor Corp and Huadi International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nucor Corp and Huadi International Group, you can compare the effects of market volatilities on Nucor Corp and Huadi International 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 Nucor Corp with a short position of Huadi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nucor Corp and Huadi International.
Diversification Opportunities for Nucor Corp and Huadi International
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nucor and Huadi is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nucor Corp and Huadi International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huadi International and Nucor Corp 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 Nucor Corp are associated (or correlated) with Huadi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huadi International has no effect on the direction of Nucor Corp i.e., Nucor Corp and Huadi International go up and down completely randomly.
Pair Corralation between Nucor Corp and Huadi International
Considering the 90-day investment horizon Nucor Corp is expected to under-perform the Huadi International. But the stock apears to be less risky and, when comparing its historical volatility, Nucor Corp is 1.69 times less risky than Huadi International. The stock trades about -0.05 of its potential returns per unit of risk. The Huadi International Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 198.00 in Huadi International Group on September 15, 2024 and sell it today you would lose (31.00) from holding Huadi International Group or give up 15.66% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Nucor Corp vs. Huadi International Group
Performance |
Timeline |
Nucor Corp |
Huadi International |
Nucor Corp and Huadi International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nucor Corp and Huadi International
The main advantage of trading using opposite Nucor Corp and Huadi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nucor Corp position performs unexpectedly, Huadi International 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 Huadi International will offset losses from the drop in Huadi International's long position.Nucor Corp vs. United States Steel | ||
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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