Correlation Between H B and Hudson Technologies

Can any of the company-specific risk be diversified away by investing in both H B 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 H B and Hudson Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between H B Fuller and Hudson Technologies, you can compare the effects of market volatilities on H B 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 H B with a short position of Hudson Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of H B and Hudson Technologies.

Diversification Opportunities for H B and Hudson Technologies

0.76

Correlation Coefficient

H B  Hudson Technologies

Poor diversification

The 3 months correlation between FUL and Hudson is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding H B Fuller and Hudson Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Technologies and H B 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 H B Fuller 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 H B i.e., H B and Hudson Technologies go up and down completely randomly.

Pair Corralation between H B and Hudson Technologies

Considering the 90-day investment horizon H B Fuller is expected to under-perform the Hudson Technologies. But the stock apears to be less risky and, when comparing its historical volatility, H B Fuller is 1.86 times less risky than Hudson Technologies. The stock trades about -0.02 of its potential returns per unit of risk. The Hudson Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  782.00  in Hudson Technologies on July 13, 2024 and sell it today you would earn a total of  8.00  from holding Hudson Technologies or generate 1.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

H B Fuller  vs.  Hudson Technologies

H B Fuller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H B Fuller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, H B is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Hudson Technologies

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with H B and Hudson Technologies

The main advantage of trading using opposite H B and Hudson Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H B 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.

The idea behind H B Fuller 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 Anywhere module to track or share privately all of your investments from the convenience of any device.