Correlation Between Suburban Propane and Hudson Technologies

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

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

Diversification Opportunities for Suburban Propane and Hudson Technologies

0.04

Correlation Coefficient

Suburban Propane  Hudson Technologies

Significant diversification

The 3 months correlation between Suburban and Hudson is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners and Hudson Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Technologies and Suburban Propane 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 Suburban Propane Partners 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 Suburban Propane i.e., Suburban Propane and Hudson Technologies go up and down completely randomly.

Pair Corralation between Suburban Propane and Hudson Technologies

Considering the 90-day investment horizon Suburban Propane Partners is expected to under-perform the Hudson Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Suburban Propane Partners is 1.24 times less risky than Hudson Technologies. The stock trades about -0.17 of its potential returns per unit of risk. The Hudson Technologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  588.00  in Hudson Technologies on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Hudson Technologies or generate 0.0% return on investment over 90 days.

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

Suburban Propane Partners  vs.  Hudson Technologies

Suburban Propane Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suburban Propane Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Suburban Propane is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Suburban Propane and Hudson Technologies

The main advantage of trading using opposite Suburban Propane and Hudson Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suburban Propane 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 Suburban Propane Partners 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.