Correlation Between Hudson Global and DLH Holdings

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

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

Diversification Opportunities for Hudson Global and DLH Holdings

0.44

Correlation Coefficient

Hudson Global  DLH Holdings

Very weak diversification

The 3 months correlation between Hudson and DLH is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Global and DLH Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DLH Holdings Corp 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 DLH Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DLH Holdings Corp has no effect on the direction of Hudson Global i.e., Hudson Global and DLH Holdings go up and down completely randomly.

Pair Corralation between Hudson Global and DLH Holdings

Given the investment horizon of 90 days Hudson Global is expected to generate 1.02 times more return on investment than DLH Holdings. However, Hudson Global is 1.02 times more volatile than DLH Holdings Corp. It trades about -0.08 of its potential returns per unit of risk. DLH Holdings Corp is currently generating about -0.12 per unit of risk. If you would invest  1,604  in Hudson Global on September 26, 2024 and sell it today you would lose (216.00) from holding Hudson Global or give up 13.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Hudson Global  vs.  DLH Holdings Corp

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 unsteady 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.

DLH Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DLH Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Hudson Global and DLH Holdings

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

The idea behind Hudson Global and DLH Holdings Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.