Correlation Between Hudson Technologies and Frontier

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

By analyzing existing cross correlation between Hudson Technologies and Frontier Florida 686, you can compare the effects of market volatilities on Hudson Technologies and Frontier 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 Frontier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudson Technologies and Frontier.

Diversification Opportunities for Hudson Technologies and Frontier

0.18

Correlation Coefficient

Hudson Technologies  Frontier

Average diversification

The 3 months correlation between Hudson and Frontier is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and Frontier Florida 686 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Florida 686 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 Frontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Florida 686 has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and Frontier go up and down completely randomly.

Pair Corralation between Hudson Technologies and Frontier

Given the investment horizon of 90 days Hudson Technologies is expected to under-perform the Frontier. But the stock apears to be less risky and, when comparing its historical volatility, Hudson Technologies is 16.65 times less risky than Frontier. The stock trades about -0.02 of its potential returns per unit of risk. The Frontier Florida 686 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,146  in Frontier Florida 686 on September 15, 2024 and sell it today you would earn a total of  649.00  from holding Frontier Florida 686 or generate 7.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	80.4%
Values	Daily Returns

Hudson Technologies  vs.  Frontier Florida 686

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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Frontier Florida 686

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frontier Florida 686 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Frontier is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hudson Technologies and Frontier

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

The idea behind Hudson Technologies and Frontier Florida 686 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 Transaction History module to view history of all your transactions and understand their impact on performance.