Correlation Between Hudson Capital and Focus Financial

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

Diversification Opportunities for Hudson Capital and Focus Financial

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Hudson and Focus is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Capital Inc and Focus Financial Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Financial Partners and Hudson Capital 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 Capital are associated (or correlated) with Focus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Financial Partners has no effect on the direction of Hudson Capital i.e., Hudson Capital and Focus Financial go up and down completely randomly.

Pair Corralation between Hudson Capital and Focus Financial

Given the investment horizon of 90 days Hudson Capital is expected to generate 6.78 times more return on investment than Focus Financial. However, Hudson Capital is 6.78 times more volatile than Focus Financial Partners. It trades about 0.04 of its potential returns per unit of risk. Focus Financial Partners is currently generating about 0.01 per unit of risk. If you would invest  154.00  in Hudson Capital on March 31, 2022 and sell it today you would earn a total of  12.00  from holding Hudson Capital or generate 7.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.98%
ValuesDaily Returns

Hudson Capital Inc  vs.  Focus Financial Partners

 Performance (%) 
      Timeline 
Hudson Capital 
Hudson Performance
0 of 100
Over the last 90 days Hudson Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Hudson Capital is not utilizing all of its potentials. The new stock price mess, may contribute to short-term losses for the institutional investors.
Focus Financial Partners 
Focus Performance
0 of 100
Over the last 90 days Focus Financial Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in July 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Focus Price Channel

Hudson Capital and Focus Financial Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Hudson Capital and Focus Financial

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

Hudson Capital

Pair trading matchups for Hudson Capital

The idea behind Hudson Capital and Focus Financial Partners 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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