Correlation Between Hudson Technologies and Stepan
Can any of the company-specific risk be diversified away by investing in both Hudson Technologies and Stepan 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 Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hudson Technologies and Stepan Company, you can compare the effects of market volatilities on Hudson Technologies and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudson Technologies and Stepan.
Diversification Opportunities for Hudson Technologies and Stepan
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hudson and Stepan is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and Stepan go up and down completely randomly.
Pair Corralation between Hudson Technologies and Stepan
Given the investment horizon of 90 days Hudson Technologies is expected to under-perform the Stepan. In addition to that, Hudson Technologies is 1.69 times more volatile than Stepan Company. It trades about -0.03 of its total potential returns per unit of risk. Stepan Company is currently generating about -0.03 per unit of volatility. If you would invest 10,782 in Stepan Company on September 3, 2024 and sell it today you would lose (3,092) from holding Stepan Company or give up 28.68% 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. Stepan Company
Performance |
| Timeline |
| Hudson Technologies |
| Stepan Company |
Hudson Technologies and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hudson Technologies and Stepan
The main advantage of trading using opposite Hudson Technologies and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Technologies position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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