Correlation Between Labrador Gold and Huadi International
Can any of the company-specific risk be diversified away by investing in both Labrador Gold 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 Labrador Gold and Huadi International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Labrador Gold Corp and Huadi International Group, you can compare the effects of market volatilities on Labrador Gold 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 Labrador Gold with a short position of Huadi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labrador Gold and Huadi International.
Diversification Opportunities for Labrador Gold and Huadi International
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Labrador and Huadi is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Labrador Gold 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 Labrador Gold 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 Labrador Gold 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 Labrador Gold i.e., Labrador Gold and Huadi International go up and down completely randomly.
Pair Corralation between Labrador Gold and Huadi International
Assuming the 90 days horizon Labrador Gold Corp is expected to under-perform the Huadi International. In addition to that, Labrador Gold is 3.57 times more volatile than Huadi International Group. It trades about -0.26 of its total potential returns per unit of risk. Huadi International Group is currently generating about -0.01 per unit of volatility. If you would invest 201.00 in Huadi International Group on August 27, 2024 and sell it today you would lose (1.00) from holding Huadi International Group or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Labrador Gold Corp vs. Huadi International Group
Performance |
| Timeline |
| Labrador Gold Corp |
| Huadi International |
Labrador Gold and Huadi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Labrador Gold and Huadi International
The main advantage of trading using opposite Labrador Gold and Huadi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labrador Gold 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.| Labrador Gold vs. Aurion Resources | Labrador Gold vs. Liberty Gold Corp | Labrador Gold vs. Orezone Gold Corp | Labrador Gold vs. Radisson Mining Resources |
| Huadi International vs. Labrador Gold Corp | Huadi International vs. Aurion Resources | Huadi International vs. Puma Exploration | Huadi International vs. Golden Star Resource |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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