Correlation Between Forum Merger and HCM Acquisition
Can any of the company-specific risk be diversified away by investing in both Forum Merger and HCM 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 Forum Merger and HCM Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forum Merger IV and HCM Acquisition Corp, you can compare the effects of market volatilities on Forum Merger and HCM 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 Forum Merger with a short position of HCM Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Merger and HCM Acquisition.
Diversification Opportunities for Forum Merger and HCM Acquisition
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Forum and HCM is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Forum Merger IV and HCM Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCM Acquisition Corp and Forum Merger 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 Forum Merger IV are associated (or correlated) with HCM Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCM Acquisition Corp has no effect on the direction of Forum Merger i.e., Forum Merger and HCM Acquisition go up and down completely randomly.
Pair Corralation between Forum Merger and HCM Acquisition
Given the investment horizon of 90 days Forum Merger is expected to generate 422.48 times less return on investment than HCM Acquisition. But when comparing it to its historical volatility, Forum Merger IV is 336.21 times less risky than HCM Acquisition. It trades about 0.14 of its potential returns per unit of risk. HCM Acquisition Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 5.22 in HCM Acquisition Corp on August 26, 2024 and sell it today you would lose (3.16) from holding HCM Acquisition Corp or give up 60.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 55.56% |
| Values | Daily Returns |
Forum Merger IV vs. HCM Acquisition Corp
Performance |
| Timeline |
| Forum Merger IV |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| HCM Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Forum Merger and HCM Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forum Merger and HCM Acquisition
The main advantage of trading using opposite Forum Merger and HCM Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forum Merger position performs unexpectedly, HCM 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 HCM Acquisition will offset losses from the drop in HCM Acquisition's long position.| Forum Merger vs. Welsbach Technology Metals | Forum Merger vs. Broad Capital Acquisition | Forum Merger vs. Finnovate Acquisition Corp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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