Correlation Between Hudson Global and BG Staffing

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

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

Diversification Opportunities for Hudson Global and BG Staffing

-0.28

Correlation Coefficient

Hudson Global  BG Staffing

Very good diversification

The 3 months correlation between Hudson and BGSF is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Global and BG Staffing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Staffing 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 BG Staffing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Staffing has no effect on the direction of Hudson Global i.e., Hudson Global and BG Staffing go up and down completely randomly.

Pair Corralation between Hudson Global and BG Staffing

Given the investment horizon of 90 days Hudson Global is expected to generate 1.55 times more return on investment than BG Staffing. However, Hudson Global is 1.55 times more volatile than BG Staffing. It trades about -0.16 of its potential returns per unit of risk. BG Staffing is currently generating about -0.41 per unit of risk. If you would invest  1,789  in Hudson Global on February 1, 2024 and sell it today you would lose (139.00) from holding Hudson Global or give up 7.77% of portfolio value over 90 days.

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

Hudson Global  vs.  BG Staffing

Hudson Global

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hudson Global are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Hudson Global displayed solid returns over the last few months and may actually be approaching a breakup point.

BG Staffing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BG Staffing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hudson Global and BG Staffing

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

The idea behind Hudson Global and BG Staffing 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.