Correlation Between Hudson Technologies and Southern
Can any of the company-specific risk be diversified away by investing in both Hudson Technologies and Southern 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 Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hudson Technologies and Southern Co, you can compare the effects of market volatilities on Hudson Technologies and Southern 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 Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudson Technologies and Southern.
Diversification Opportunities for Hudson Technologies and Southern
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hudson and Southern is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and Southern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern 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 Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and Southern go up and down completely randomly.
Pair Corralation between Hudson Technologies and Southern
Given the investment horizon of 90 days Hudson Technologies is expected to under-perform the Southern. In addition to that, Hudson Technologies is 3.89 times more volatile than Southern Co. It trades about -0.03 of its total potential returns per unit of risk. Southern Co is currently generating about 0.01 per unit of volatility. If you would invest 2,263 in Southern Co on August 31, 2024 and sell it today you would earn a total of 55.00 from holding Southern Co or generate 2.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hudson Technologies vs. Southern Co
Performance |
| Timeline |
| Hudson Technologies |
| Southern |
Hudson Technologies and Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hudson Technologies and Southern
The main advantage of trading using opposite Hudson Technologies and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Technologies position performs unexpectedly, Southern 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 Southern will offset losses from the drop in Southern's long position.| Hudson Technologies vs. Sensient Technologies | Hudson Technologies vs. Innospec | Hudson Technologies vs. H B Fuller | Hudson Technologies vs. Quaker Chemical |
| Southern vs. NL Industries | Southern vs. Origin Materials | Southern vs. CF Industries Holdings | Southern vs. Hudson Technologies |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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