Correlation Between Collins Foods and Hercules Capital

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

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

Diversification Opportunities for Collins Foods and Hercules Capital

0.41

Correlation Coefficient

Collins Foods  Hercules Capital

Very weak diversification

The 3 months correlation between Collins and Hercules is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods Limited and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital and Collins Foods 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 Collins Foods Limited are associated (or correlated) with Hercules Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Capital has no effect on the direction of Collins Foods i.e., Collins Foods and Hercules Capital go up and down completely randomly.

Pair Corralation between Collins Foods and Hercules Capital

Assuming the 90 days horizon Collins Foods Limited is expected to generate 1.72 times more return on investment than Hercules Capital. However, Collins Foods is 1.72 times more volatile than Hercules Capital. It trades about 0.07 of its potential returns per unit of risk. Hercules Capital is currently generating about 0.09 per unit of risk. If you would invest  446.00  in Collins Foods Limited on April 24, 2025 and sell it today you would earn a total of  46.00  from holding Collins Foods Limited or generate 10.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Collins Foods Limited  vs.  Hercules Capital

Collins Foods Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Collins Foods Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Collins Foods may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Hercules Capital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Capital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hercules Capital may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Collins Foods and Hercules Capital

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

The idea behind Collins Foods Limited and Hercules Capital 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.