Correlation Between 20369EAE2 and Hudson Technologies

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Can any of the company-specific risk be diversified away by investing in both 20369EAE2 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 20369EAE2 and Hudson Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US20369EAE23 and Hudson Technologies, you can compare the effects of market volatilities on 20369EAE2 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 20369EAE2 with a short position of Hudson Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of 20369EAE2 and Hudson Technologies.

Diversification Opportunities for 20369EAE2 and Hudson Technologies

-0.04
  Correlation Coefficient

Good diversification

The 3 months correlation between 20369EAE2 and Hudson is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding US20369EAE23 and Hudson Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Technologies and 20369EAE2 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 US20369EAE23 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 20369EAE2 i.e., 20369EAE2 and Hudson Technologies go up and down completely randomly.

Pair Corralation between 20369EAE2 and Hudson Technologies

Assuming the 90 days trading horizon US20369EAE23 is expected to generate 1.21 times more return on investment than Hudson Technologies. However, 20369EAE2 is 1.21 times more volatile than Hudson Technologies. It trades about 0.04 of its potential returns per unit of risk. Hudson Technologies is currently generating about -0.05 per unit of risk. If you would invest  6,186  in US20369EAE23 on September 12, 2024 and sell it today you would earn a total of  647.00  from holding US20369EAE23 or generate 10.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy34.14%
ValuesDaily Returns

US20369EAE23  vs.  Hudson Technologies

 Performance 
       Timeline  
US20369EAE23 

Risk-Adjusted Performance

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Over the last 90 days US20369EAE23 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 20369EAE2 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Hudson Technologies 

Risk-Adjusted Performance

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Weak
 
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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.

20369EAE2 and Hudson Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 20369EAE2 and Hudson Technologies

The main advantage of trading using opposite 20369EAE2 and Hudson Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 20369EAE2 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.
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The idea behind US20369EAE23 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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