Correlation Between Hudson Technologies and Balchem

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

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

Diversification Opportunities for Hudson Technologies and Balchem

-0.01

Correlation Coefficient

Hudson Technologies  Balchem

Good diversification

The 3 months correlation between Hudson and Balchem is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem 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 Balchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balchem has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and Balchem go up and down completely randomly.

Pair Corralation between Hudson Technologies and Balchem

Given the investment horizon of 90 days Hudson Technologies is expected to under-perform the Balchem. In addition to that, Hudson Technologies is 2.0 times more volatile than Balchem. It trades about -0.03 of its total potential returns per unit of risk. Balchem is currently generating about 0.03 per unit of volatility. If you would invest  13,787  in Balchem on October 24, 2024 and sell it today you would earn a total of  2,375  from holding Balchem or generate 17.23% return on investment over 90 days.

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

Hudson Technologies  vs.  Balchem

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.

Balchem

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Balchem has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Balchem is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hudson Technologies and Balchem

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

The idea behind Hudson Technologies and Balchem 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.