Correlation Between Hudson Technologies and Resources Connection
Can any of the company-specific risk be diversified away by investing in both Hudson Technologies and Resources Connection 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 Hudson Technologies and Resources Connection into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hudson Technologies and Resources Connection, you can compare the effects of market volatilities on Hudson Technologies and Resources Connection 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 Hudson Technologies with a short position of Resources Connection. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudson Technologies and Resources Connection.
Diversification Opportunities for Hudson Technologies and Resources Connection
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hudson and Resources is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and Resources Connection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resources Connection and Hudson Technologies 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 Hudson Technologies are associated (or correlated) with Resources Connection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resources Connection has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and Resources Connection go up and down completely randomly.
Pair Corralation between Hudson Technologies and Resources Connection
Given the investment horizon of 90 days Hudson Technologies is expected to generate 1.52 times more return on investment than Resources Connection. However, Hudson Technologies is 1.52 times more volatile than Resources Connection. It trades about -0.02 of its potential returns per unit of risk. Resources Connection is currently generating about -0.07 per unit of risk. If you would invest 1,006 in Hudson Technologies on November 9, 2024 and sell it today you would lose (441.00) from holding Hudson Technologies or give up 43.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hudson Technologies vs. Resources Connection
Performance |
| Timeline |
| Hudson Technologies |
| Resources Connection |
Hudson Technologies and Resources Connection Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hudson Technologies and Resources Connection
The main advantage of trading using opposite Hudson Technologies and Resources Connection positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Technologies position performs unexpectedly, Resources Connection 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 Resources Connection will offset losses from the drop in Resources Connection's long position.| Hudson Technologies vs. Sensient Technologies | Hudson Technologies vs. Innospec | Hudson Technologies vs. H B Fuller | Hudson Technologies vs. Quaker Chemical |
| Resources Connection vs. CRA International | Resources Connection vs. Huron Consulting Group | Resources Connection vs. Forrester Research | Resources Connection vs. Exponent |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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