Correlation Between Apple and HUDSON TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and HUDSON TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and HUDSON TECHNOLOGY, you can compare the effects of market volatilities on Apple 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 Apple with a short position of HUDSON TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and HUDSON TECHNOLOGY.
Diversification Opportunities for Apple and HUDSON TECHNOLOGY
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and HUDSON is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and HUDSON TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUDSON TECHNOLOGY and Apple 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 Apple Inc 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 Apple i.e., Apple and HUDSON TECHNOLOGY go up and down completely randomly.
Pair Corralation between Apple and HUDSON TECHNOLOGY
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.28 times more return on investment than HUDSON TECHNOLOGY. However, Apple Inc is 3.59 times less risky than HUDSON TECHNOLOGY. It trades about 0.1 of its potential returns per unit of risk. HUDSON TECHNOLOGY is currently generating about -0.08 per unit of risk. If you would invest 20,670 in Apple Inc on September 2, 2024 and sell it today you would earn a total of 1,725 from holding Apple Inc or generate 8.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. HUDSON TECHNOLOGY
Performance |
| Timeline |
| Apple Inc |
| HUDSON TECHNOLOGY |
Apple and HUDSON TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and HUDSON TECHNOLOGY
The main advantage of trading using opposite Apple and HUDSON TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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. Apple Inc | HUDSON TECHNOLOGY vs. Apple Inc | HUDSON TECHNOLOGY vs. Apple Inc | HUDSON TECHNOLOGY vs. Apple Inc |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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