Correlation Between JD Sports and Hudson Technologies

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

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

Diversification Opportunities for JD Sports and Hudson Technologies

0.87

Correlation Coefficient

JD Sports  Hudson Technologies

Very poor diversification

The 3 months correlation between JDSPY and Hudson is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Hudson Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Technologies and JD Sports 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 JD Sports Fashion are associated (or correlated) with Hudson Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Technologies has no effect on the direction of JD Sports i.e., JD Sports and Hudson Technologies go up and down completely randomly.

Pair Corralation between JD Sports and Hudson Technologies

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Hudson Technologies. In addition to that, JD Sports is 1.13 times more volatile than Hudson Technologies. It trades about -0.14 of its total potential returns per unit of risk. Hudson Technologies is currently generating about -0.13 per unit of volatility. If you would invest  791.00  in Hudson Technologies on September 14, 2024 and sell it today you would lose (229.50) from holding Hudson Technologies or give up 29.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

JD Sports Fashion  vs.  Hudson Technologies

JD Sports Fashion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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.

Pair Trading with JD Sports and Hudson Technologies

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

The idea behind JD Sports Fashion and Hudson 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.