Correlation Between Hudson Technologies and Core Molding

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

By analyzing existing cross correlation between Hudson Technologies and Core Molding Technologies, you can compare the effects of market volatilities on Hudson Technologies and Core Molding 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 Core Molding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudson Technologies and Core Molding.

Diversification Opportunities for Hudson Technologies and Core Molding

0.23

Correlation Coefficient

Hudson Technologies  Core Molding

Modest diversification

The 3 months correlation between Hudson and Core is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and Core Molding Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Molding Technologies 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 Core Molding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Molding Technologies has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and Core Molding go up and down completely randomly.

Pair Corralation between Hudson Technologies and Core Molding

Given the investment horizon of 90 days Hudson Technologies is expected to under-perform the Core Molding. In addition to that, Hudson Technologies is 1.49 times more volatile than Core Molding Technologies. It trades about -0.14 of its total potential returns per unit of risk. Core Molding Technologies is currently generating about -0.05 per unit of volatility. If you would invest  1,717  in Core Molding Technologies on September 13, 2024 and sell it today you would lose (120.00) from holding Core Molding Technologies or give up 6.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.67%
Values	Daily Returns

Hudson Technologies  vs.  Core Molding Technologies

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.

Core Molding Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Core Molding Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Hudson Technologies and Core Molding

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

The idea behind Hudson Technologies and Core Molding 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.