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

0.38

Correlation Coefficient

Hercules Capital  Hoist Finance

Weak diversification

The 3 months correlation between Hercules and Hoist is 0.38. 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 9.35 times less return on investment than Hoist Finance. But when comparing it to its historical volatility, Hercules Capital is 2.31 times less risky than Hoist Finance. It trades about 0.01 of its potential returns per unit of risk. Hoist Finance AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  799.00  in Hoist Finance AB on September 22, 2024 and sell it today you would earn a total of  12.00  from holding Hoist Finance AB or generate 1.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Hercules Capital  vs.  Hoist Finance AB

Hercules Capital

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Capital are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Hercules Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Hoist Finance AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hoist Finance AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hoist Finance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

The idea behind Hercules Capital and Hoist Finance AB 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.