Correlation Between HUDSON GLOBAL and HAMMONIA Schiffsholding

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

By analyzing existing cross correlation between HUDSON GLOBAL INCDL 001 and HAMMONIA Schiffsholding AG, you can compare the effects of market volatilities on HUDSON GLOBAL and HAMMONIA Schiffsholding 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 GLOBAL with a short position of HAMMONIA Schiffsholding. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUDSON GLOBAL and HAMMONIA Schiffsholding.

Diversification Opportunities for HUDSON GLOBAL and HAMMONIA Schiffsholding

0.66

Correlation Coefficient

HUDSON GLOBAL  HAMMONIA Schiffsholding

Poor diversification

The 3 months correlation between HUDSON and HAMMONIA is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding HUDSON GLOBAL INCDL 001 and HAMMONIA Schiffsholding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAMMONIA Schiffsholding and HUDSON GLOBAL 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 GLOBAL INCDL 001 are associated (or correlated) with HAMMONIA Schiffsholding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAMMONIA Schiffsholding has no effect on the direction of HUDSON GLOBAL i.e., HUDSON GLOBAL and HAMMONIA Schiffsholding go up and down completely randomly.

Pair Corralation between HUDSON GLOBAL and HAMMONIA Schiffsholding

Assuming the 90 days trading horizon HUDSON GLOBAL INCDL 001 is expected to under-perform the HAMMONIA Schiffsholding. But the stock apears to be less risky and, when comparing its historical volatility, HUDSON GLOBAL INCDL 001 is 1.06 times less risky than HAMMONIA Schiffsholding. The stock trades about -0.06 of its potential returns per unit of risk. The HAMMONIA Schiffsholding AG is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  28,200  in HAMMONIA Schiffsholding AG on December 30, 2024 and sell it today you would lose (2,400) from holding HAMMONIA Schiffsholding AG or give up 8.51% of portfolio value over 90 days.

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

HUDSON GLOBAL INCDL 001  vs.  HAMMONIA Schiffsholding AG

HUDSON GLOBAL INCDL

Risk-Adjusted Performance

Very Weak

Over the last 90 days HUDSON GLOBAL INCDL 001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

HAMMONIA Schiffsholding

Risk-Adjusted Performance

Very Weak

Over the last 90 days HAMMONIA Schiffsholding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with HUDSON GLOBAL and HAMMONIA Schiffsholding

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

The idea behind HUDSON GLOBAL INCDL 001 and HAMMONIA Schiffsholding AG 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.