Correlation Between Hrcules SA and Lupatech

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

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

Diversification Opportunities for Hrcules SA and Lupatech

-0.12

Correlation Coefficient

Hrcules SA  Lupatech

Good diversification

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

Pair Corralation between Hrcules SA and Lupatech

Assuming the 90 days trading horizon Hrcules SA is expected to generate 1.65 times more return on investment than Lupatech. However, Hrcules SA is 1.65 times more volatile than Lupatech SA. It trades about 0.08 of its potential returns per unit of risk. Lupatech SA is currently generating about -0.07 per unit of risk. 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 Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Hrcules SA   vs.  Lupatech SA

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.

Lupatech SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lupatech SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Hrcules SA and Lupatech

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

The idea behind Hrcules SA and Lupatech 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.