Correlation Between Hercules Capital and Elysee Development

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

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

Diversification Opportunities for Hercules Capital and Elysee Development

0.44

Correlation Coefficient

Hercules Capital  Elysee Development

Very weak diversification

The 3 months correlation between Hercules and Elysee is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and Elysee Development Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elysee Development Corp 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 Elysee Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elysee Development Corp has no effect on the direction of Hercules Capital i.e., Hercules Capital and Elysee Development go up and down completely randomly.

Pair Corralation between Hercules Capital and Elysee Development

Given the investment horizon of 90 days Hercules Capital is expected to generate 15.51 times less return on investment than Elysee Development. But when comparing it to its historical volatility, Hercules Capital is 4.01 times less risky than Elysee Development. It trades about 0.01 of its potential returns per unit of risk. Elysee Development Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Elysee Development Corp on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Elysee Development Corp or generate 0.0% 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.  Elysee Development Corp

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 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.

Elysee Development Corp

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Hercules Capital and Elysee Development

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

The idea behind Hercules Capital and Elysee Development Corp 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.