Correlation Between Hercules Capital and Aimia

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

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

Diversification Opportunities for Hercules Capital and Aimia

0.23

Correlation Coefficient

Hercules Capital  Aimia

Modest diversification

The 3 months correlation between Hercules and Aimia is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and Aimia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aimia Inc 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 Aimia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aimia Inc has no effect on the direction of Hercules Capital i.e., Hercules Capital and Aimia go up and down completely randomly.

Pair Corralation between Hercules Capital and Aimia

Given the investment horizon of 90 days Hercules Capital is expected to generate 0.39 times more return on investment than Aimia. However, Hercules Capital is 2.54 times less risky than Aimia. It trades about 0.16 of its potential returns per unit of risk. Aimia Inc is currently generating about -0.07 per unit of risk. If you would invest  1,939  in Hercules Capital on October 10, 2024 and sell it today you would earn a total of  63.00  from holding Hercules Capital or generate 3.25% return on investment over 90 days.

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

Hercules Capital  vs.  Aimia Inc

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. 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.

Aimia Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aimia Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Aimia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hercules Capital and Aimia

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

The idea behind Hercules Capital and Aimia Inc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.