Correlation Between Hudson Technologies and Crown Electrokinetics

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

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

Diversification Opportunities for Hudson Technologies and Crown Electrokinetics

0.73

Correlation Coefficient

Hudson Technologies  Crown Electrokinetics

Poor diversification

The 3 months correlation between Hudson and Crown is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and Crown Electrokinetics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Electrokinetics 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 Crown Electrokinetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Electrokinetics has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and Crown Electrokinetics go up and down completely randomly.

Pair Corralation between Hudson Technologies and Crown Electrokinetics

Given the investment horizon of 90 days Hudson Technologies is expected to generate 0.5 times more return on investment than Crown Electrokinetics. However, Hudson Technologies is 1.98 times less risky than Crown Electrokinetics. It trades about -0.23 of its potential returns per unit of risk. Crown Electrokinetics Corp is currently generating about -0.48 per unit of risk. If you would invest  796.00  in Hudson Technologies on August 30, 2024 and sell it today you would lose (208.00) from holding Hudson Technologies or give up 26.13% of portfolio value over 90 days.

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

Hudson Technologies  vs.  Crown Electrokinetics Corp

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 December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Crown Electrokinetics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Electrokinetics Corp 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 forward-looking signals remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Hudson Technologies and Crown Electrokinetics

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

The idea behind Hudson Technologies and Crown Electrokinetics Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.