Correlation Between AeroCentury Corp and Herc Holdings

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Can any of the company-specific risk be diversified away by investing in both AeroCentury Corp and Herc Holdings 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 AeroCentury Corp and Herc Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AeroCentury Corp and Herc Holdings, you can compare the effects of market volatilities on AeroCentury Corp and Herc Holdings 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 AeroCentury Corp with a short position of Herc Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of AeroCentury Corp and Herc Holdings.

Diversification Opportunities for AeroCentury Corp and Herc Holdings

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between AeroCentury and Herc is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AeroCentury Corp and Herc Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc Holdings and AeroCentury Corp 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 AeroCentury Corp are associated (or correlated) with Herc Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herc Holdings has no effect on the direction of AeroCentury Corp i.e., AeroCentury Corp and Herc Holdings go up and down completely randomly.

Pair Corralation between AeroCentury Corp and Herc Holdings

If you would invest  12,888  in Herc Holdings on December 29, 2023 and sell it today you would earn a total of  3,942  from holding Herc Holdings or generate 30.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

AeroCentury Corp  vs.  Herc Holdings

 Performance 
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AeroCentury Corp 

Risk-Adjusted Performance

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Over the last 90 days AeroCentury Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, AeroCentury Corp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
Herc Holdings 

Risk-Adjusted Performance

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OK
Compared to the overall equity markets, risk-adjusted returns on investments in Herc Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Herc Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

AeroCentury Corp and Herc Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AeroCentury Corp and Herc Holdings

The main advantage of trading using opposite AeroCentury Corp and Herc Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AeroCentury Corp position performs unexpectedly, Herc Holdings 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 Herc Holdings will offset losses from the drop in Herc Holdings' long position.
The idea behind AeroCentury Corp and Herc Holdings 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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