Correlation Between Hudson Technologies and BCE

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

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

Diversification Opportunities for Hudson Technologies and BCE

0.95

Correlation Coefficient

Hudson Technologies  BCE

Almost no diversification

The 3 months correlation between Hudson and BCE is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE 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 BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and BCE go up and down completely randomly.

Pair Corralation between Hudson Technologies and BCE

Given the investment horizon of 90 days Hudson Technologies is expected to under-perform the BCE. In addition to that, Hudson Technologies is 2.46 times more volatile than BCE Inc. It trades about -0.09 of its total potential returns per unit of risk. BCE Inc is currently generating about -0.12 per unit of volatility. If you would invest  3,301  in BCE Inc on September 2, 2024 and sell it today you would lose (598.00) from holding BCE Inc or give up 18.12% of portfolio value over 90 days.

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

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

BCE Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Hudson Technologies and BCE

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

The idea behind Hudson Technologies and BCE 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.