Correlation Between Triton International and Huadi International

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

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

Diversification Opportunities for Triton International and Huadi International

0.28

Correlation Coefficient

Triton International  Huadi International

Modest diversification

The 3 months correlation between Triton and Huadi is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Triton International Limited and Huadi International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huadi International and Triton 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 Triton International Limited 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 Triton International i.e., Triton International and Huadi International go up and down completely randomly.

Pair Corralation between Triton International and Huadi International

Assuming the 90 days trading horizon Triton International Limited is expected to generate 0.13 times more return on investment than Huadi International. However, Triton International Limited is 7.89 times less risky than Huadi International. It trades about 0.04 of its potential returns per unit of risk. Huadi International Group is currently generating about -0.02 per unit of risk. If you would invest  2,364  in Triton International Limited on September 29, 2024 and sell it today you would earn a total of  66.00  from holding Triton International Limited or generate 2.79% return on investment over 90 days.

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

Triton International Limited  vs.  Huadi International Group

Triton International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triton International Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Triton International is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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 January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Triton International and Huadi International

The main advantage of trading using opposite Triton International and Huadi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triton International 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 Triton International Limited 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 Global Correlations module to find global opportunities by holding instruments from different markets.