Correlation Between Air Lease and Hudson Global

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

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

Diversification Opportunities for Air Lease and Hudson Global

0.5

Correlation Coefficient

Air Lease  Hudson Global

Very weak diversification

The 3 months correlation between Air and Hudson is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Hudson Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Global and Air Lease 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 Air Lease are associated (or correlated) with Hudson Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Global has no effect on the direction of Air Lease i.e., Air Lease and Hudson Global go up and down completely randomly.

Pair Corralation between Air Lease and Hudson Global

Allowing for the 90-day total investment horizon Air Lease is expected to generate 0.97 times more return on investment than Hudson Global. However, Air Lease is 1.03 times less risky than Hudson Global. It trades about 0.01 of its potential returns per unit of risk. Hudson Global is currently generating about -0.2 per unit of risk. If you would invest  4,705  in Air Lease on December 18, 2024 and sell it today you would lose (27.00) from holding Air Lease or give up 0.57% of portfolio value over 90 days.

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

Air Lease  vs.  Hudson Global

Air Lease

Risk-Adjusted Performance

Very Weak

Over the last 90 days Air Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Air Lease is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Hudson Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hudson Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Air Lease and Hudson Global

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

The idea behind Air Lease and Hudson Global 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..