Correlation Between Cumulus Media and Hudson Technologies
Can any of the company-specific risk be diversified away by investing in both Cumulus Media 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 Cumulus Media and Hudson Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumulus Media Class and Hudson Technologies, you can compare the effects of market volatilities on Cumulus Media 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 Cumulus Media with a short position of Hudson Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumulus Media and Hudson Technologies.
Diversification Opportunities for Cumulus Media and Hudson Technologies
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cumulus and Hudson is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Cumulus Media Class and Hudson Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Technologies and Cumulus Media 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 Cumulus Media Class 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 Cumulus Media i.e., Cumulus Media and Hudson Technologies go up and down completely randomly.
Pair Corralation between Cumulus Media and Hudson Technologies
Given the investment horizon of 90 days Cumulus Media Class is expected to under-perform the Hudson Technologies. In addition to that, Cumulus Media is 1.43 times more volatile than Hudson Technologies. It trades about -0.14 of its total potential returns per unit of risk. Hudson Technologies is currently generating about -0.11 per unit of volatility. If you would invest 875.00 in Hudson Technologies on September 19, 2024 and sell it today you would lose (338.00) from holding Hudson Technologies or give up 38.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumulus Media Class vs. Hudson Technologies
Performance |
| Timeline |
| Cumulus Media Class |
| Hudson Technologies |
Cumulus Media and Hudson Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumulus Media and Hudson Technologies
The main advantage of trading using opposite Cumulus Media and Hudson Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumulus Media 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.| Cumulus Media vs. Marchex | Cumulus Media vs. Direct Digital Holdings | Cumulus Media vs. Cimpress NV | Cumulus Media vs. Emerald Expositions Events |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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