Correlation Between Hudson Resources and Kootenay Silver

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

By analyzing existing cross correlation between Hudson Resources and Kootenay Silver, you can compare the effects of market volatilities on Hudson Resources and Kootenay Silver 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 Resources with a short position of Kootenay Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudson Resources and Kootenay Silver.

Diversification Opportunities for Hudson Resources and Kootenay Silver

0.31

Correlation Coefficient

Hudson Resources  Kootenay Silver

Weak diversification

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

Pair Corralation between Hudson Resources and Kootenay Silver

Assuming the 90 days horizon Hudson Resources is expected to generate 1.18 times more return on investment than Kootenay Silver. However, Hudson Resources is 1.18 times more volatile than Kootenay Silver. It trades about 0.17 of its potential returns per unit of risk. Kootenay Silver is currently generating about 0.19 per unit of risk. If you would invest  1.39  in Hudson Resources on October 22, 2024 and sell it today you would earn a total of  0.25  from holding Hudson Resources or generate 17.99% return on investment over 90 days.

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

Hudson Resources  vs.  Kootenay Silver

Hudson Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hudson Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hudson Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Kootenay Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kootenay Silver has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hudson Resources and Kootenay Silver

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

The idea behind Hudson Resources and Kootenay Silver 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.