Correlation Between Universal Stainless and HUHUTECH International

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

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

Diversification Opportunities for Universal Stainless and HUHUTECH International

0.04

Correlation Coefficient

Universal Stainless  HUHUTECH International

Significant diversification

The 3 months correlation between Universal and HUHUTECH is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Universal Stainless Alloy and HUHUTECH International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUHUTECH International and Universal Stainless 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 Universal Stainless Alloy are associated (or correlated) with HUHUTECH International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUHUTECH International has no effect on the direction of Universal Stainless i.e., Universal Stainless and HUHUTECH International go up and down completely randomly.

Pair Corralation between Universal Stainless and HUHUTECH International

Given the investment horizon of 90 days Universal Stainless Alloy is expected to generate 0.65 times more return on investment than HUHUTECH International. However, Universal Stainless Alloy is 1.54 times less risky than HUHUTECH International. It trades about 0.13 of its potential returns per unit of risk. HUHUTECH International Group is currently generating about 0.06 per unit of risk. If you would invest  2,967  in Universal Stainless Alloy on October 22, 2024 and sell it today you would earn a total of  1,478  from holding Universal Stainless Alloy or generate 49.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	49.6%
Values	Daily Returns

Universal Stainless Alloy  vs.  HUHUTECH International Group

Universal Stainless Alloy

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Stainless Alloy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Universal Stainless is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

HUHUTECH International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HUHUTECH International Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical indicators, HUHUTECH International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Universal Stainless and HUHUTECH International

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

The idea behind Universal Stainless Alloy and HUHUTECH 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.