Correlation Between Summit Materials and Hudson Technologies
Can any of the company-specific risk be diversified away by investing in both Summit Materials 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 Summit Materials and Hudson Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Hudson Technologies, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of Hudson Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Hudson Technologies.
Diversification Opportunities for Summit Materials and Hudson Technologies
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Summit and Hudson is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Hudson Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Technologies and Summit Materials 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 Summit Materials 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 Summit Materials i.e., Summit Materials and Hudson Technologies go up and down completely randomly.
Pair Corralation between Summit Materials and Hudson Technologies
Considering the 90-day investment horizon Summit Materials is expected to generate 1.94 times less return on investment than Hudson Technologies. But when comparing it to its historical volatility, Summit Materials is 4.94 times less risky than Hudson Technologies. It trades about 0.33 of its potential returns per unit of risk. Hudson Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 546.00 in Hudson Technologies on December 28, 2024 and sell it today you would earn a total of 83.00 from holding Hudson Technologies or generate 15.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 48.33% |
Values | Daily Returns |
Summit Materials vs. Hudson Technologies
Performance |
Timeline |
Summit Materials |
Risk-Adjusted Performance
Solid
Weak | Strong |
Hudson Technologies |
Summit Materials and Hudson Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Summit Materials and Hudson Technologies
The main advantage of trading using opposite Summit Materials and Hudson Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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.Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
Hudson Technologies vs. Sensient Technologies | Hudson Technologies vs. Innospec | Hudson Technologies vs. H B Fuller | Hudson Technologies vs. Quaker Chemical |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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