Correlation Between Hercules Capital and Hoist Finance
Can any of the company-specific risk be diversified away by investing in both Hercules Capital and Hoist Finance 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 Hercules Capital and Hoist Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hercules Capital and Hoist Finance AB, you can compare the effects of market volatilities on Hercules Capital and Hoist Finance 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 Hercules Capital with a short position of Hoist Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hercules Capital and Hoist Finance.
Diversification Opportunities for Hercules Capital and Hoist Finance
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hercules and Hoist is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and Hoist Finance AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoist Finance AB and Hercules 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 Hercules Capital are associated (or correlated) with Hoist Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoist Finance AB has no effect on the direction of Hercules Capital i.e., Hercules Capital and Hoist Finance go up and down completely randomly.
Pair Corralation between Hercules Capital and Hoist Finance
Assuming the 90 days horizon Hercules Capital is expected to generate 2.02 times less return on investment than Hoist Finance. But when comparing it to its historical volatility, Hercules Capital is 1.6 times less risky than Hoist Finance. It trades about 0.07 of its potential returns per unit of risk. Hoist Finance AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 264.00 in Hoist Finance AB on September 26, 2024 and sell it today you would earn a total of 520.00 from holding Hoist Finance AB or generate 196.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hercules Capital vs. Hoist Finance AB
Performance |
| Timeline |
| Hercules Capital |
| Hoist Finance AB |
Hercules Capital and Hoist Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hercules Capital and Hoist Finance
The main advantage of trading using opposite Hercules Capital and Hoist Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hercules Capital position performs unexpectedly, Hoist Finance 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 Hoist Finance will offset losses from the drop in Hoist Finance's long position.| Hercules Capital vs. Harmony Gold Mining | Hercules Capital vs. Evolution Mining Limited | Hercules Capital vs. ORMAT TECHNOLOGIES | Hercules Capital vs. GRIFFIN MINING LTD |
| Hoist Finance vs. Far East Horizon | Hoist Finance vs. Walker Dunlop | Hoist Finance vs. Paragon Banking Group | Hoist Finance vs. Hercules Capital |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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