Correlation Between Hudson Technologies and Paysafe

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

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

Diversification Opportunities for Hudson Technologies and Paysafe

0.52

Correlation Coefficient

Hudson Technologies  Paysafe

Very weak diversification

The 3 months correlation between Hudson and Paysafe is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and Paysafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paysafe 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 Paysafe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paysafe has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and Paysafe go up and down completely randomly.

Pair Corralation between Hudson Technologies and Paysafe

Given the investment horizon of 90 days Hudson Technologies is expected to under-perform the Paysafe. But the stock apears to be less risky and, when comparing its historical volatility, Hudson Technologies is 1.05 times less risky than Paysafe. The stock trades about -0.09 of its potential returns per unit of risk. The Paysafe is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,798  in Paysafe on September 13, 2024 and sell it today you would earn a total of  98.00  from holding Paysafe or generate 5.45% return on investment over 90 days.

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

Hudson Technologies  vs.  Paysafe

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.

Paysafe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paysafe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Hudson Technologies and Paysafe

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

The idea behind Hudson Technologies and Paysafe 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..