Correlation Between Hudson Technologies and General Environmental

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

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

Diversification Opportunities for Hudson Technologies and General Environmental

-0.14

Correlation Coefficient

Hudson Technologies  General Environmental

Good diversification

The 3 months correlation between Hudson and General is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and General Environmental Manageme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Environmental 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 General Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Environmental has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and General Environmental go up and down completely randomly.

Pair Corralation between Hudson Technologies and General Environmental

Given the investment horizon of 90 days Hudson Technologies is expected to under-perform the General Environmental. But the stock apears to be less risky and, when comparing its historical volatility, Hudson Technologies is 1.45 times less risky than General Environmental. The stock trades about -0.11 of its potential returns per unit of risk. The General Environmental Management is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  83.00  in General Environmental Management on September 13, 2024 and sell it today you would lose (8.00) from holding General Environmental Management or give up 9.64% of portfolio value over 90 days.

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

Hudson Technologies  vs.  General Environmental Manageme

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.

General Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hudson Technologies and General Environmental

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

The idea behind Hudson Technologies and General Environmental Management 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.