Correlation Between Nucor Corp and Huadi International

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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

NucorHuadiDiversified AwayNucorHuadiDiversified Away100%
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 Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Nucor Corp  vs.  Huadi International Group

 Performance 
JavaScript chart by amCharts 3.21.15OctNov 01020304050
JavaScript chart by amCharts 3.21.15NUE HUDI
       Timeline  
Nucor Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nucor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec125130135140145150155160165170
Huadi International 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1.61.822.22.42.62.83

Nucor Corp and Huadi International Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.74-3.55-2.36-1.17-0.01981.12.243.374.515.65 0.0150.0200.0250.0300.0350.0400.045
JavaScript chart by amCharts 3.21.15NUE HUDI
       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.
The idea behind Nucor Corp and Huadi International 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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