Correlation Between Atlas Corp and Hudson Resources

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

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

Diversification Opportunities for Atlas Corp and Hudson Resources

-0.3

Correlation Coefficient

Atlas Corp  Hudson Resources

Very good diversification

The 3 months correlation between Atlas and Hudson is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Corp and Hudson Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Resources and Atlas Corp 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 Atlas Corp are associated (or correlated) with Hudson Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Resources has no effect on the direction of Atlas Corp i.e., Atlas Corp and Hudson Resources go up and down completely randomly.

Pair Corralation between Atlas Corp and Hudson Resources

Assuming the 90 days horizon Atlas Corp is expected to generate 46.55 times less return on investment than Hudson Resources. But when comparing it to its historical volatility, Atlas Corp is 46.84 times less risky than Hudson Resources. It trades about 0.13 of its potential returns per unit of risk. Hudson Resources is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1.39  in Hudson Resources on December 28, 2024 and sell it today you would earn a total of  0.65  from holding Hudson Resources or generate 46.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.49%
Values	Daily Returns

Atlas Corp  vs.  Hudson Resources

Atlas Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Atlas Corp is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Hudson Resources

Risk-Adjusted Performance

OK

Over the last 90 days Hudson Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Hudson Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlas Corp and Hudson Resources

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

The idea behind Atlas Corp and Hudson Resources 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.