Correlation Between Corporacion America and Hudson Technologies

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

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

Diversification Opportunities for Corporacion America and Hudson Technologies

-0.63

Correlation Coefficient

Corporacion America  Hudson Technologies

Excellent diversification

The 3 months correlation between Corporacion and Hudson is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Corporacion America Airports and Hudson Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Technologies and Corporacion America 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 Corporacion America Airports 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 Corporacion America i.e., Corporacion America and Hudson Technologies go up and down completely randomly.

Pair Corralation between Corporacion America and Hudson Technologies

Given the investment horizon of 90 days Corporacion America is expected to generate 6.47 times less return on investment than Hudson Technologies. In addition to that, Corporacion America is 1.22 times more volatile than Hudson Technologies. It trades about 0.01 of its total potential returns per unit of risk. Hudson Technologies is currently generating about 0.11 per unit of volatility. If you would invest  584.00  in Hudson Technologies on October 8, 2024 and sell it today you would earn a total of  22.00  from holding Hudson Technologies or generate 3.77% return on investment over 90 days.

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

Corporacion America Airports  vs.  Hudson Technologies

Corporacion America

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacion America Airports are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Corporacion America may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Corporacion America and Hudson Technologies

The main advantage of trading using opposite Corporacion America and Hudson Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporacion America 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 Corporacion America Airports 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.