Correlation Between Revolve Group and Huadi International

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

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

Diversification Opportunities for Revolve Group and Huadi International

-0.71

Correlation Coefficient

Revolve Group  Huadi International

Pay attention - limited upside

The 3 months correlation between Revolve and Huadi is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Revolve Group LLC and Huadi International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huadi International and Revolve Group 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 Revolve Group LLC 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 Revolve Group i.e., Revolve Group and Huadi International go up and down completely randomly.

Pair Corralation between Revolve Group and Huadi International

Given the investment horizon of 90 days Revolve Group LLC is expected to under-perform the Huadi International. But the stock apears to be less risky and, when comparing its historical volatility, Revolve Group LLC is 1.11 times less risky than Huadi International. The stock trades about -0.11 of its potential returns per unit of risk. The Huadi International Group is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  191.00  in Huadi International Group on October 6, 2024 and sell it today you would lose (11.00) from holding Huadi International Group or give up 5.76% of portfolio value over 90 days.

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

Revolve Group LLC  vs.  Huadi International Group

Revolve Group LLC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Revolve Group LLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Revolve Group showed solid returns over the last few months and may actually be approaching a breakup point.

Huadi International

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Revolve Group and Huadi International

The main advantage of trading using opposite Revolve Group and Huadi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Revolve Group 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 Revolve Group LLC 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.