Correlation Between Cebu Air and Hudson Technologies
Can any of the company-specific risk be diversified away by investing in both Cebu Air and Hudson Technologies 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 Cebu Air and Hudson Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cebu Air ADR and Hudson Technologies, you can compare the effects of market volatilities on Cebu Air and Hudson Technologies 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 Cebu Air with a short position of Hudson Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and Hudson Technologies.
Diversification Opportunities for Cebu Air and Hudson Technologies
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cebu and Hudson is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and Hudson Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Technologies and Cebu Air 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 Cebu Air ADR are associated (or correlated) with Hudson Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Technologies has no effect on the direction of Cebu Air i.e., Cebu Air and Hudson Technologies go up and down completely randomly.
Pair Corralation between Cebu Air and Hudson Technologies
Assuming the 90 days horizon Cebu Air ADR is expected to generate 1.52 times more return on investment than Hudson Technologies. However, Cebu Air is 1.52 times more volatile than Hudson Technologies. It trades about -0.03 of its potential returns per unit of risk. Hudson Technologies is currently generating about -0.08 per unit of risk. If you would invest 366.00 in Cebu Air ADR on September 1, 2024 and sell it today you would lose (181.00) from holding Cebu Air ADR or give up 49.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Cebu Air ADR vs. Hudson Technologies
Performance |
| Timeline |
| Cebu Air ADR |
| Hudson Technologies |
Cebu Air and Hudson Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and Hudson Technologies
The main advantage of trading using opposite Cebu Air and Hudson Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air position performs unexpectedly, Hudson Technologies 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 Technologies will offset losses from the drop in Hudson Technologies' long position.| Cebu Air vs. PennantPark Floating Rate | Cebu Air vs. Planet Fitness | Cebu Air vs. Fidus Investment Corp | Cebu Air vs. GAMCO Global Gold |
| Hudson Technologies vs. Sensient Technologies | Hudson Technologies vs. Innospec | Hudson Technologies vs. H B Fuller | Hudson Technologies vs. Quaker Chemical |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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