Correlation Between HAGA SA and Hrcules SA

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

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

Diversification Opportunities for HAGA SA and Hrcules SA

0.06

Correlation Coefficient

HAGA SA  Hrcules SA

Significant diversification

The 3 months correlation between HAGA and Hrcules is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding HAGA SA Indstria and Hrcules SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hrcules SA and HAGA SA 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 HAGA SA Indstria are associated (or correlated) with Hrcules SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hrcules SA has no effect on the direction of HAGA SA i.e., HAGA SA and Hrcules SA go up and down completely randomly.

Pair Corralation between HAGA SA and Hrcules SA

Assuming the 90 days trading horizon HAGA SA is expected to generate 2.29 times less return on investment than Hrcules SA. But when comparing it to its historical volatility, HAGA SA Indstria is 2.91 times less risky than Hrcules SA. It trades about 0.11 of its potential returns per unit of risk. Hrcules SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  550.00  in Hrcules SA on September 5, 2024 and sell it today you would earn a total of  105.00  from holding Hrcules SA or generate 19.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

HAGA SA Indstria  vs.  Hrcules SA

HAGA SA Indstria

Risk-Adjusted Performance

8 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HAGA SA Indstria are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HAGA SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hrcules SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hrcules SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hrcules SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HAGA SA and Hrcules SA

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

The idea behind HAGA SA Indstria and Hrcules SA 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.