Correlation Between CONSTELLATION and Hudson Technologies

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

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

Diversification Opportunities for CONSTELLATION and Hudson Technologies

0.34

Correlation Coefficient

CONSTELLATION  Hudson Technologies

Weak diversification

The 3 months correlation between CONSTELLATION and Hudson is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding CONSTELLATION BRANDS INC and Hudson Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Technologies and CONSTELLATION 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 CONSTELLATION BRANDS INC 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 CONSTELLATION i.e., CONSTELLATION and Hudson Technologies go up and down completely randomly.

Pair Corralation between CONSTELLATION and Hudson Technologies

Assuming the 90 days trading horizon CONSTELLATION BRANDS INC is expected to generate 0.12 times more return on investment than Hudson Technologies. However, CONSTELLATION BRANDS INC is 8.06 times less risky than Hudson Technologies. It trades about -0.22 of its potential returns per unit of risk. Hudson Technologies is currently generating about -0.08 per unit of risk. If you would invest  9,693  in CONSTELLATION BRANDS INC on October 5, 2024 and sell it today you would lose (83.00) from holding CONSTELLATION BRANDS INC or give up 0.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

CONSTELLATION BRANDS INC  vs.  Hudson Technologies

CONSTELLATION BRANDS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSTELLATION BRANDS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CONSTELLATION is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with CONSTELLATION and Hudson Technologies

The main advantage of trading using opposite CONSTELLATION and Hudson Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CONSTELLATION 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 CONSTELLATION BRANDS INC 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.