Correlation Between Hudson Technologies and Knife River

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

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

Diversification Opportunities for Hudson Technologies and Knife River

-0.19

Correlation Coefficient

Hudson Technologies  Knife River

Good diversification

The 3 months correlation between Hudson and Knife is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River 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 Knife River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knife River has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and Knife River go up and down completely randomly.

Pair Corralation between Hudson Technologies and Knife River

Given the investment horizon of 90 days Hudson Technologies is expected to generate 0.71 times more return on investment than Knife River. However, Hudson Technologies is 1.41 times less risky than Knife River. It trades about 0.14 of its potential returns per unit of risk. Knife River is currently generating about -0.03 per unit of risk. If you would invest  540.00  in Hudson Technologies on December 27, 2024 and sell it today you would earn a total of  89.00  from holding Hudson Technologies or generate 16.48% 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.  Knife River

Hudson Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hudson Technologies are ranked lower than 10 (%) 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.

Knife River

Risk-Adjusted Performance

Very Weak

Over the last 90 days Knife River has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Knife River is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hudson Technologies and Knife River

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

The idea behind Hudson Technologies and Knife River 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.