Correlation Between Hudson Technologies and X-FAB Silicon
Can any of the company-specific risk be diversified away by investing in both Hudson Technologies and X-FAB Silicon 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 X-FAB Silicon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hudson Technologies and X FAB Silicon Foundries, you can compare the effects of market volatilities on Hudson Technologies and X-FAB Silicon 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 X-FAB Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudson Technologies and X-FAB Silicon.
Diversification Opportunities for Hudson Technologies and X-FAB Silicon
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hudson and X-FAB is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X-FAB Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and X-FAB Silicon go up and down completely randomly.
Pair Corralation between Hudson Technologies and X-FAB Silicon
Given the investment horizon of 90 days Hudson Technologies is expected to generate 1.19 times more return on investment than X-FAB Silicon. However, Hudson Technologies is 1.19 times more volatile than X FAB Silicon Foundries. It trades about -0.1 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.13 per unit of risk. If you would invest 1,283 in Hudson Technologies on August 29, 2024 and sell it today you would lose (693.00) from holding Hudson Technologies or give up 54.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hudson Technologies vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Hudson Technologies |
| X FAB Silicon |
Hudson Technologies and X-FAB Silicon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hudson Technologies and X-FAB Silicon
The main advantage of trading using opposite Hudson Technologies and X-FAB Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Technologies position performs unexpectedly, X-FAB Silicon 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 X-FAB Silicon will offset losses from the drop in X-FAB Silicon's long position.| Hudson Technologies vs. Sensient Technologies | Hudson Technologies vs. Quaker Chemical | Hudson Technologies vs. Minerals Technologies | Hudson Technologies vs. Hawkins |
| X-FAB Silicon vs. NVIDIA | X-FAB Silicon vs. Intel | X-FAB Silicon vs. Taiwan Semiconductor Manufacturing | X-FAB Silicon vs. Marvell Technology Group |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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