Correlation Between Hudson Technologies and RB Global

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

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

Diversification Opportunities for Hudson Technologies and RB Global

0.31

Correlation Coefficient

Hudson Technologies  RB Global

Weak diversification

The 3 months correlation between Hudson and RBA is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and RB Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RB Global 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 RB Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RB Global has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and RB Global go up and down completely randomly.

Pair Corralation between Hudson Technologies and RB Global

Given the investment horizon of 90 days Hudson Technologies is expected to generate 25.28 times less return on investment than RB Global. In addition to that, Hudson Technologies is 1.24 times more volatile than RB Global. It trades about 0.0 of its total potential returns per unit of risk. RB Global is currently generating about 0.05 per unit of volatility. If you would invest  9,776  in RB Global on November 28, 2024 and sell it today you would earn a total of  359.00  from holding RB Global or generate 3.67% return on investment over 90 days.

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

Hudson Technologies  vs.  RB Global

Hudson Technologies

Risk-Adjusted Performance

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 very healthy basic indicators, Hudson Technologies is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

RB Global

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RB Global are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, RB Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hudson Technologies and RB Global

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

The idea behind Hudson Technologies and RB Global 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.