Correlation Between Santech Holdings and Huadi International
Can any of the company-specific risk be diversified away by investing in both Santech Holdings 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 Santech Holdings and Huadi International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Santech Holdings Limited and Huadi International Group, you can compare the effects of market volatilities on Santech Holdings 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 Santech Holdings with a short position of Huadi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santech Holdings and Huadi International.
Diversification Opportunities for Santech Holdings and Huadi International
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Santech and Huadi is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Santech Holdings 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 Santech Holdings 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 Santech Holdings 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 Santech Holdings i.e., Santech Holdings and Huadi International go up and down completely randomly.
Pair Corralation between Santech Holdings and Huadi International
Given the investment horizon of 90 days Santech Holdings Limited is expected to generate 13.13 times more return on investment than Huadi International. However, Santech Holdings is 13.13 times more volatile than Huadi International Group. It trades about 0.08 of its potential returns per unit of risk. Huadi International Group is currently generating about -0.03 per unit of risk. If you would invest 91.00 in Santech Holdings Limited on August 30, 2024 and sell it today you would earn a total of 5.00 from holding Santech Holdings Limited or generate 5.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Santech Holdings Limited vs. Huadi International Group
Performance |
| Timeline |
| Santech Holdings |
| Huadi International |
Santech Holdings and Huadi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santech Holdings and Huadi International
The main advantage of trading using opposite Santech Holdings and Huadi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santech Holdings 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.| Santech Holdings vs. Braskem SA Class | Santech Holdings vs. Tandem Diabetes Care | Santech Holdings vs. Chemours Co | Santech Holdings vs. Alvotech |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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