Correlation Between Hudson Technologies and Deluxe

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

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

Diversification Opportunities for Hudson Technologies and Deluxe

-0.36

Correlation Coefficient

Hudson Technologies  Deluxe

Very good diversification

The 3 months correlation between Hudson and Deluxe is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and Deluxe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deluxe 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 Deluxe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deluxe has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and Deluxe go up and down completely randomly.

Pair Corralation between Hudson Technologies and Deluxe

Given the investment horizon of 90 days Hudson Technologies is expected to generate 0.86 times more return on investment than Deluxe. However, Hudson Technologies is 1.16 times less risky than Deluxe. It trades about 0.11 of its potential returns per unit of risk. Deluxe is currently generating about -0.21 per unit of risk. If you would invest  546.00  in Hudson Technologies on December 29, 2024 and sell it today you would earn a total of  72.00  from holding Hudson Technologies or generate 13.19% 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.  Deluxe

Hudson Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hudson Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Hudson Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Deluxe

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deluxe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hudson Technologies and Deluxe

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

The idea behind Hudson Technologies and Deluxe 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.