Correlation Between Hercules Capital and Carbon Streaming

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

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

Diversification Opportunities for Hercules Capital and Carbon Streaming

0.35

Correlation Coefficient

Hercules Capital  Carbon Streaming

Weak diversification

The 3 months correlation between Hercules and Carbon is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and Carbon Streaming Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbon Streaming 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 Carbon Streaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbon Streaming Corp has no effect on the direction of Hercules Capital i.e., Hercules Capital and Carbon Streaming go up and down completely randomly.

Pair Corralation between Hercules Capital and Carbon Streaming

Given the investment horizon of 90 days Hercules Capital is expected to generate 0.3 times more return on investment than Carbon Streaming. However, Hercules Capital is 3.37 times less risky than Carbon Streaming. It trades about 0.24 of its potential returns per unit of risk. Carbon Streaming Corp is currently generating about 0.05 per unit of risk. If you would invest  1,897  in Hercules Capital on October 3, 2024 and sell it today you would earn a total of  112.00  from holding Hercules Capital or generate 5.9% 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.  Carbon Streaming Corp

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.

Carbon Streaming Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carbon Streaming Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Carbon Streaming 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 Carbon Streaming

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

The idea behind Hercules Capital and Carbon Streaming 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 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.