Correlation Between National Beverage and Hudson Technologies

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Can any of the company-specific risk be diversified away by investing in both National Beverage 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 National Beverage and Hudson Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and Hudson Technologies, you can compare the effects of market volatilities on National Beverage 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 National Beverage with a short position of Hudson Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Hudson Technologies.

Diversification Opportunities for National Beverage and Hudson Technologies

-0.79
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between National and Hudson is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Hudson Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Technologies and National Beverage 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 National Beverage Corp 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 National Beverage i.e., National Beverage and Hudson Technologies go up and down completely randomly.

Pair Corralation between National Beverage and Hudson Technologies

Given the investment horizon of 90 days National Beverage Corp is expected to under-perform the Hudson Technologies. In addition to that, National Beverage is 1.04 times more volatile than Hudson Technologies. It trades about -0.12 of its total potential returns per unit of risk. Hudson Technologies is currently generating about -0.08 per unit of volatility. If you would invest  598.00  in Hudson Technologies on September 13, 2024 and sell it today you would lose (23.50) from holding Hudson Technologies or give up 3.93% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

National Beverage Corp  vs.  Hudson Technologies

 Performance 
       Timeline  
National Beverage Corp 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, National Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Hudson Technologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hudson Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

National Beverage and Hudson Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with National Beverage and Hudson Technologies

The main advantage of trading using opposite National Beverage and Hudson Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage 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.
The idea behind National Beverage Corp and Hudson Technologies 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.
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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