Correlation Between Hudson Global and Futuris

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

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

Diversification Opportunities for Hudson Global and Futuris

0.04

Correlation Coefficient

Hudson Global  Futuris

Significant diversification

The 3 months correlation between Hudson and Futuris is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Global and Futuris Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futuris Company 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 are associated (or correlated) with Futuris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futuris Company has no effect on the direction of Hudson Global i.e., Hudson Global and Futuris go up and down completely randomly.

Pair Corralation between Hudson Global and Futuris

Given the investment horizon of 90 days Hudson Global is expected to generate 4.4 times more return on investment than Futuris. However, Hudson Global is 4.4 times more volatile than Futuris Company. It trades about 0.06 of its potential returns per unit of risk. Futuris Company is currently generating about 0.05 per unit of risk. If you would invest  1,630  in Hudson Global on September 2, 2024 and sell it today you would lose (152.00) from holding Hudson Global or give up 9.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.8%
Values	Daily Returns

Hudson Global  vs.  Futuris Company

Hudson Global

Risk-Adjusted Performance

0 of 100

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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Futuris Company

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Futuris Company are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Futuris unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hudson Global and Futuris

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

The idea behind Hudson Global and Futuris Company 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.