Correlation Between MidCap Financial and HELIOS TECHS

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

By analyzing existing cross correlation between MidCap Financial Investment and HELIOS TECHS INC, you can compare the effects of market volatilities on MidCap Financial and HELIOS TECHS 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 MidCap Financial with a short position of HELIOS TECHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and HELIOS TECHS.

Diversification Opportunities for MidCap Financial and HELIOS TECHS

0.74

Correlation Coefficient

MidCap Financial  HELIOS TECHS

Poor diversification

The 3 months correlation between MidCap and HELIOS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and HELIOS TECHS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HELIOS TECHS INC and MidCap Financial 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 MidCap Financial Investment are associated (or correlated) with HELIOS TECHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HELIOS TECHS INC has no effect on the direction of MidCap Financial i.e., MidCap Financial and HELIOS TECHS go up and down completely randomly.

Pair Corralation between MidCap Financial and HELIOS TECHS

Assuming the 90 days trading horizon MidCap Financial is expected to generate 2.54 times less return on investment than HELIOS TECHS. But when comparing it to its historical volatility, MidCap Financial Investment is 2.19 times less risky than HELIOS TECHS. It trades about 0.18 of its potential returns per unit of risk. HELIOS TECHS INC is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,174  in HELIOS TECHS INC on April 21, 2025 and sell it today you would earn a total of  966.00  from holding HELIOS TECHS INC or generate 44.43% return on investment over 90 days.

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

MidCap Financial Investment  vs.  HELIOS TECHS INC

MidCap Financial Inv

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MidCap Financial Investment are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MidCap Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

HELIOS TECHS INC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HELIOS TECHS INC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HELIOS TECHS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MidCap Financial and HELIOS TECHS

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

The idea behind MidCap Financial Investment and HELIOS TECHS 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.