Correlation Between Cleantech Power and Hudson Pacific

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

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

Diversification Opportunities for Cleantech Power and Hudson Pacific

0.0

Correlation Coefficient

Cleantech Power  Hudson Pacific

Pay attention - limited upside

The 3 months correlation between Cleantech and Hudson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cleantech Power Corp and Hudson Pacific Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Pacific Properties and Cleantech Power 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 Cleantech Power Corp are associated (or correlated) with Hudson Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Pacific Properties has no effect on the direction of Cleantech Power i.e., Cleantech Power and Hudson Pacific go up and down completely randomly.

Pair Corralation between Cleantech Power and Hudson Pacific

Assuming the 90 days horizon Cleantech Power Corp is expected to generate 20.41 times more return on investment than Hudson Pacific. However, Cleantech Power is 20.41 times more volatile than Hudson Pacific Properties. It trades about 0.1 of its potential returns per unit of risk. Hudson Pacific Properties is currently generating about -0.04 per unit of risk. If you would invest  5.64  in Cleantech Power Corp on October 3, 2024 and sell it today you would lose (5.05) from holding Cleantech Power Corp or give up 89.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	94.55%
Values	Daily Returns

Cleantech Power Corp  vs.  Hudson Pacific Properties

Cleantech Power Corp

Risk-Adjusted Performance

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Very Weak

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

Hudson Pacific Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hudson Pacific Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Cleantech Power and Hudson Pacific

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

The idea behind Cleantech Power Corp and Hudson Pacific Properties 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.