Correlation Between Hercules Capital and De Grey

Can any of the company-specific risk be diversified away by investing in both Hercules Capital and De Grey 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 De Grey into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hercules Capital and De Grey Mining, you can compare the effects of market volatilities on Hercules Capital and De Grey 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 De Grey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hercules Capital and De Grey.

Diversification Opportunities for Hercules Capital and De Grey

0.48

Correlation Coefficient

Hercules Capital  De Grey

Very weak diversification

The 3 months correlation between Hercules and DGD is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and De Grey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Grey Mining 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 De Grey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Grey Mining has no effect on the direction of Hercules Capital i.e., Hercules Capital and De Grey go up and down completely randomly.

Pair Corralation between Hercules Capital and De Grey

Assuming the 90 days horizon Hercules Capital is expected to generate 0.75 times more return on investment than De Grey. However, Hercules Capital is 1.34 times less risky than De Grey. It trades about 0.3 of its potential returns per unit of risk. De Grey Mining is currently generating about -0.16 per unit of risk. If you would invest  1,861  in Hercules Capital on October 8, 2024 and sell it today you would earn a total of  149.00  from holding Hercules Capital or generate 8.01% return on investment over 90 days.

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

Hercules Capital  vs.  De Grey Mining

Hercules Capital

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Hercules Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

De Grey Mining

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in De Grey Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, De Grey unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hercules Capital and De Grey

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

The idea behind Hercules Capital and De Grey Mining 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.