Correlation Between Major Drilling and HUDSON TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both Major Drilling and HUDSON TECHNOLOGY 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 Major Drilling and HUDSON TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and HUDSON TECHNOLOGY, you can compare the effects of market volatilities on Major Drilling and HUDSON TECHNOLOGY 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 Major Drilling with a short position of HUDSON TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and HUDSON TECHNOLOGY.
Diversification Opportunities for Major Drilling and HUDSON TECHNOLOGY
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Major and HUDSON is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and HUDSON TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUDSON TECHNOLOGY and Major Drilling 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 Major Drilling Group are associated (or correlated) with HUDSON TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUDSON TECHNOLOGY has no effect on the direction of Major Drilling i.e., Major Drilling and HUDSON TECHNOLOGY go up and down completely randomly.
Pair Corralation between Major Drilling and HUDSON TECHNOLOGY
Assuming the 90 days horizon Major Drilling Group is expected to generate 0.59 times more return on investment than HUDSON TECHNOLOGY. However, Major Drilling Group is 1.7 times less risky than HUDSON TECHNOLOGY. It trades about -0.01 of its potential returns per unit of risk. HUDSON TECHNOLOGY is currently generating about -0.01 per unit of risk. If you would invest 725.00 in Major Drilling Group on September 5, 2024 and sell it today you would lose (155.00) from holding Major Drilling Group or give up 21.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Major Drilling Group vs. HUDSON TECHNOLOGY
Performance |
| Timeline |
| Major Drilling Group |
| HUDSON TECHNOLOGY |
Major Drilling and HUDSON TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and HUDSON TECHNOLOGY
The main advantage of trading using opposite Major Drilling and HUDSON TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, HUDSON TECHNOLOGY 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 HUDSON TECHNOLOGY will offset losses from the drop in HUDSON TECHNOLOGY's long position.The idea behind Major Drilling Group and HUDSON TECHNOLOGY 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.| HUDSON TECHNOLOGY vs. Perseus Mining Limited | HUDSON TECHNOLOGY vs. Sims Metal Management | HUDSON TECHNOLOGY vs. Major Drilling Group | HUDSON TECHNOLOGY vs. Lion One Metals |
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 Stocks Directory module to find actively traded stocks across global markets.
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