Correlation Between Hudson Technologies and Nexstar Broadcasting

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

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

Diversification Opportunities for Hudson Technologies and Nexstar Broadcasting

-0.18

Correlation Coefficient

Hudson Technologies  Nexstar Broadcasting

Good diversification

The 3 months correlation between Hudson and Nexstar is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and Nexstar Broadcasting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Broadcasting 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 Nexstar Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexstar Broadcasting has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and Nexstar Broadcasting go up and down completely randomly.

Pair Corralation between Hudson Technologies and Nexstar Broadcasting

Given the investment horizon of 90 days Hudson Technologies is expected to under-perform the Nexstar Broadcasting. In addition to that, Hudson Technologies is 1.65 times more volatile than Nexstar Broadcasting Group. It trades about -0.16 of its total potential returns per unit of risk. Nexstar Broadcasting Group is currently generating about 0.0 per unit of volatility. If you would invest  16,621  in Nexstar Broadcasting Group on September 18, 2024 and sell it today you would lose (288.00) from holding Nexstar Broadcasting Group or give up 1.73% 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.  Nexstar Broadcasting Group

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.

Nexstar Broadcasting

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexstar Broadcasting Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nexstar Broadcasting is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hudson Technologies and Nexstar Broadcasting

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

The idea behind Hudson Technologies and Nexstar Broadcasting Group 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.