Correlation Between Distoken Acquisition and Hercules Capital

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

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

Diversification Opportunities for Distoken Acquisition and Hercules Capital

0.22

Correlation Coefficient

Distoken Acquisition  Hercules Capital

Modest diversification

The 3 months correlation between Distoken and Hercules is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Distoken Acquisition and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital and Distoken Acquisition 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 Distoken Acquisition 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 Distoken Acquisition i.e., Distoken Acquisition and Hercules Capital go up and down completely randomly.

Pair Corralation between Distoken Acquisition and Hercules Capital

Given the investment horizon of 90 days Distoken Acquisition is expected to generate 0.83 times more return on investment than Hercules Capital. However, Distoken Acquisition is 1.2 times less risky than Hercules Capital. It trades about -0.01 of its potential returns per unit of risk. Hercules Capital is currently generating about -0.01 per unit of risk. If you would invest  1,120  in Distoken Acquisition on December 27, 2024 and sell it today you would lose (9.00) from holding Distoken Acquisition or give up 0.8% of portfolio value over 90 days.

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

Distoken Acquisition  vs.  Hercules Capital

Distoken Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Distoken Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Distoken Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Hercules Capital

Risk-Adjusted Performance

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 rather sound technical and fundamental indicators, Hercules Capital is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Distoken Acquisition and Hercules Capital

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

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.