Correlation Between Lifevantage and Hudson Technologies

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

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

Diversification Opportunities for Lifevantage and Hudson Technologies

-0.82

Correlation Coefficient

Lifevantage  Hudson Technologies

Pay attention - limited upside

The 3 months correlation between Lifevantage and Hudson is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage and Hudson Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Technologies and Lifevantage 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 Lifevantage are associated (or correlated) with Hudson Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Technologies has no effect on the direction of Lifevantage i.e., Lifevantage and Hudson Technologies go up and down completely randomly.

Pair Corralation between Lifevantage and Hudson Technologies

Given the investment horizon of 90 days Lifevantage is expected to generate 3.63 times more return on investment than Hudson Technologies. However, Lifevantage is 3.63 times more volatile than Hudson Technologies. It trades about 0.26 of its potential returns per unit of risk. Hudson Technologies is currently generating about -0.39 per unit of risk. If you would invest  1,379  in Lifevantage on September 25, 2024 and sell it today you would earn a total of  410.00  from holding Lifevantage or generate 29.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Lifevantage  vs.  Hudson Technologies

Lifevantage

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifevantage are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Lifevantage displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Lifevantage and Hudson Technologies

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

The idea behind Lifevantage and Hudson Technologies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.