Correlation Between SEI Investments and Hudson Technologies

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

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

Diversification Opportunities for SEI Investments and Hudson Technologies

-0.91

Correlation Coefficient

SEI Investments  Hudson Technologies

Pay attention - limited upside

The 3 months correlation between SEI and Hudson is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and Hudson Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Technologies and SEI Investments 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 SEI Investments 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 SEI Investments i.e., SEI Investments and Hudson Technologies go up and down completely randomly.

Pair Corralation between SEI Investments and Hudson Technologies

Given the investment horizon of 90 days SEI Investments is expected to generate 0.38 times more return on investment than Hudson Technologies. However, SEI Investments is 2.61 times less risky than Hudson Technologies. It trades about 0.21 of its potential returns per unit of risk. Hudson Technologies is currently generating about -0.17 per unit of risk. If you would invest  6,881  in SEI Investments on September 21, 2024 and sell it today you would earn a total of  1,266  from holding SEI Investments or generate 18.4% return on investment over 90 days.

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

SEI Investments  vs.  Hudson Technologies

SEI Investments

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SEI Investments are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal forward indicators, SEI Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 SEI Investments and Hudson Technologies

The main advantage of trading using opposite SEI Investments and Hudson Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEI Investments 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 SEI Investments 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..