Correlation Between Hudson Technologies and RCM Technologies

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

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

Diversification Opportunities for Hudson Technologies and RCM Technologies

0.64

Correlation Coefficient

Hudson Technologies  RCM Technologies

Poor diversification

The 3 months correlation between Hudson and RCM is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and RCM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM Technologies 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 RCM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCM Technologies has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and RCM Technologies go up and down completely randomly.

Pair Corralation between Hudson Technologies and RCM Technologies

Given the investment horizon of 90 days Hudson Technologies is expected to generate 1.11 times more return on investment than RCM Technologies. However, Hudson Technologies is 1.11 times more volatile than RCM Technologies. It trades about 0.2 of its potential returns per unit of risk. RCM Technologies is currently generating about 0.17 per unit of risk. If you would invest  655.00  in Hudson Technologies on May 5, 2025 and sell it today you would earn a total of  300.00  from holding Hudson Technologies or generate 45.8% 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.  RCM Technologies

Hudson Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hudson Technologies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Hudson Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

RCM Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RCM Technologies are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, RCM Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hudson Technologies and RCM Technologies

The main advantage of trading using opposite Hudson Technologies and RCM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Technologies position performs unexpectedly, RCM 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 RCM Technologies will offset losses from the drop in RCM Technologies' long position.

The idea behind Hudson Technologies and RCM 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.