Correlation Between Aquagold International and Hercules Capital

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

By analyzing existing cross correlation between Aquagold International and Hercules Capital, you can compare the effects of market volatilities on Aquagold International 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 Aquagold International with a short position of Hercules Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Hercules Capital.

Diversification Opportunities for Aquagold International and Hercules Capital

0.38

Correlation Coefficient

Aquagold International  Hercules Capital

Weak diversification

The 3 months correlation between Aquagold and Hercules is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital and Aquagold International 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 Aquagold International 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 Aquagold International i.e., Aquagold International and Hercules Capital go up and down completely randomly.

Pair Corralation between Aquagold International and Hercules Capital

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Hercules Capital. In addition to that, Aquagold International is 82.96 times more volatile than Hercules Capital. It trades about -0.22 of its total potential returns per unit of risk. Hercules Capital is currently generating about -0.48 per unit of volatility. If you would invest  2,550  in Hercules Capital on September 27, 2024 and sell it today you would lose (63.00) from holding Hercules Capital or give up 2.47% of portfolio value over 90 days.

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

Aquagold International  vs.  Hercules Capital

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Hercules Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hercules Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Hercules Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aquagold International and Hercules Capital

The main advantage of trading using opposite Aquagold International and Hercules Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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.

The idea behind Aquagold International and Hercules Capital 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.