Correlation Between Hercules Capital and Distoken Acquisition

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

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

Diversification Opportunities for Hercules Capital and Distoken Acquisition

0.82

Correlation Coefficient

Hercules Capital  Distoken Acquisition

Very poor diversification

The 3 months correlation between Hercules and Distoken is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and Distoken Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distoken Acquisition 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 Distoken Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distoken Acquisition has no effect on the direction of Hercules Capital i.e., Hercules Capital and Distoken Acquisition go up and down completely randomly.

Pair Corralation between Hercules Capital and Distoken Acquisition

Given the investment horizon of 90 days Hercules Capital is expected to generate 13.25 times less return on investment than Distoken Acquisition. But when comparing it to its historical volatility, Hercules Capital is 11.63 times less risky than Distoken Acquisition. It trades about 0.16 of its potential returns per unit of risk. Distoken Acquisition is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,200  in Distoken Acquisition on April 24, 2025 and sell it today you would earn a total of  1,600  from holding Distoken Acquisition or generate 133.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	85.48%
Values	Daily Returns

Hercules Capital  vs.  Distoken Acquisition

Hercules Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Capital are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Hercules Capital may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Distoken Acquisition

Risk-Adjusted Performance

Good

Over the last 90 days Distoken Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Distoken Acquisition unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hercules Capital and Distoken Acquisition

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

The idea behind Hercules Capital and Distoken Acquisition 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 CEOs Directory module to screen CEOs from public companies around the world.