Correlation Between Microsoft and HUDSON GLOBAL

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Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and HUDSON GLOBAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and HUDSON GLOBAL INCDL 001, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of HUDSON GLOBAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and HUDSON GLOBAL.

Diversification Opportunities for Microsoft and HUDSON GLOBAL

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between Microsoft and HUDSON is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and HUDSON GLOBAL INCDL 001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUDSON GLOBAL INCDL and Microsoft 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 Microsoft 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 INCDL has no effect on the direction of Microsoft i.e., Microsoft and HUDSON GLOBAL go up and down completely randomly.

Pair Corralation between Microsoft and HUDSON GLOBAL

Given the investment horizon of 90 days Microsoft is expected to under-perform the HUDSON GLOBAL. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.0 times less risky than HUDSON GLOBAL. The stock trades about -0.04 of its potential returns per unit of risk. The HUDSON GLOBAL INCDL 001 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,370  in HUDSON GLOBAL INCDL 001 on August 30, 2024 and sell it today you would earn a total of  40.00  from holding HUDSON GLOBAL INCDL 001 or generate 2.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Microsoft  vs.  HUDSON GLOBAL INCDL 001

 Performance 
       Timeline  
Microsoft 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
HUDSON GLOBAL INCDL 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Microsoft and HUDSON GLOBAL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Microsoft and HUDSON GLOBAL

The main advantage of trading using opposite Microsoft and HUDSON GLOBAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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 Microsoft and HUDSON GLOBAL INCDL 001 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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