Correlation Between Tokyu Construction and Hercules Capital
Can any of the company-specific risk be diversified away by investing in both Tokyu Construction and Hercules Capital 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 Tokyu Construction and Hercules Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tokyu Construction Co and Hercules Capital, you can compare the effects of market volatilities on Tokyu Construction and Hercules Capital 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 Tokyu Construction with a short position of Hercules Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokyu Construction and Hercules Capital.
Diversification Opportunities for Tokyu Construction and Hercules Capital
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tokyu and Hercules is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Tokyu Construction Co and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital and Tokyu Construction 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 Tokyu Construction Co are associated (or correlated) with Hercules Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Capital has no effect on the direction of Tokyu Construction i.e., Tokyu Construction and Hercules Capital go up and down completely randomly.
Pair Corralation between Tokyu Construction and Hercules Capital
Assuming the 90 days horizon Tokyu Construction is expected to generate 7.53 times less return on investment than Hercules Capital. But when comparing it to its historical volatility, Tokyu Construction Co is 1.99 times less risky than Hercules Capital. It trades about 0.04 of its potential returns per unit of risk. Hercules Capital is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,850 in Hercules Capital on October 14, 2024 and sell it today you would earn a total of 70.00 from holding Hercules Capital or generate 3.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tokyu Construction Co vs. Hercules Capital
Performance |
| Timeline |
| Tokyu Construction |
| Hercules Capital |
Tokyu Construction and Hercules Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tokyu Construction and Hercules Capital
The main advantage of trading using opposite Tokyu Construction and Hercules Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokyu Construction position performs unexpectedly, Hercules Capital 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 Hercules Capital will offset losses from the drop in Hercules Capital's long position.| Tokyu Construction vs. Singapore Airlines Limited | Tokyu Construction vs. Hyatt Hotels | Tokyu Construction vs. Gol Intelligent Airlines | Tokyu Construction vs. Xenia Hotels Resorts |
| Hercules Capital vs. Tokyu Construction Co | Hercules Capital vs. MidCap Financial Investment | Hercules Capital vs. FARM 51 GROUP | Hercules Capital vs. TITAN MACHINERY |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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