Correlation Between Hudson Technologies and Bright Scholar

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

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

Diversification Opportunities for Hudson Technologies and Bright Scholar

0.45

Correlation Coefficient

Hudson Technologies  Bright Scholar

Very weak diversification

The 3 months correlation between Hudson and Bright is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and Bright Scholar Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Scholar Education and Hudson Technologies 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 Hudson Technologies are associated (or correlated) with Bright Scholar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Scholar Education has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and Bright Scholar go up and down completely randomly.

Pair Corralation between Hudson Technologies and Bright Scholar

Given the investment horizon of 90 days Hudson Technologies is expected to under-perform the Bright Scholar. In addition to that, Hudson Technologies is 1.19 times more volatile than Bright Scholar Education. It trades about -0.12 of its total potential returns per unit of risk. Bright Scholar Education is currently generating about 0.02 per unit of volatility. If you would invest  189.00  in Bright Scholar Education on September 14, 2024 and sell it today you would earn a total of  1.00  from holding Bright Scholar Education or generate 0.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Hudson Technologies  vs.  Bright Scholar Education

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.

Bright Scholar Education

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Scholar Education are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Bright Scholar is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hudson Technologies and Bright Scholar

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

The idea behind Hudson Technologies and Bright Scholar Education 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.