Correlation Between Hercules Capital and Oscar Health

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

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

Diversification Opportunities for Hercules Capital and Oscar Health

-0.12

Correlation Coefficient

Hercules Capital  Oscar Health

Good diversification

The 3 months correlation between Hercules and Oscar is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and Oscar Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oscar Health 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 Oscar Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oscar Health has no effect on the direction of Hercules Capital i.e., Hercules Capital and Oscar Health go up and down completely randomly.

Pair Corralation between Hercules Capital and Oscar Health

Given the investment horizon of 90 days Hercules Capital is expected to generate 1.6 times less return on investment than Oscar Health. But when comparing it to its historical volatility, Hercules Capital is 8.55 times less risky than Oscar Health. It trades about 0.07 of its potential returns per unit of risk. Oscar Health is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,358  in Oscar Health on December 29, 2024 and sell it today you would lose (28.00) from holding Oscar Health or give up 2.06% of portfolio value over 90 days.

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

Hercules Capital  vs.  Oscar Health

Hercules Capital

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Capital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Hercules Capital is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Oscar Health

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oscar Health are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Oscar Health is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Hercules Capital and Oscar Health

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

The idea behind Hercules Capital and Oscar Health 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..