Correlation Between Hudson Technologies and Arhaus

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

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

Diversification Opportunities for Hudson Technologies and Arhaus

-0.2

Correlation Coefficient

Hudson Technologies  Arhaus

Good diversification

The 3 months correlation between Hudson and Arhaus is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc 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 Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and Arhaus go up and down completely randomly.

Pair Corralation between Hudson Technologies and Arhaus

Given the investment horizon of 90 days Hudson Technologies is expected to generate 0.55 times more return on investment than Arhaus. However, Hudson Technologies is 1.82 times less risky than Arhaus. It trades about 0.0 of its potential returns per unit of risk. Arhaus Inc is currently generating about -0.22 per unit of risk. If you would invest  590.00  in Hudson Technologies on October 11, 2024 and sell it today you would lose (2.00) from holding Hudson Technologies or give up 0.34% of portfolio value over 90 days.

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

Hudson Technologies  vs.  Arhaus Inc

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 weak 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.

Arhaus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arhaus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Hudson Technologies and Arhaus

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

The idea behind Hudson Technologies and Arhaus Inc 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.