Correlation Between HCM Acquisition and Gardiner Healthcare
Can any of the company-specific risk be diversified away by investing in both HCM Acquisition and Gardiner Healthcare 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 HCM Acquisition and Gardiner Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCM Acquisition Corp and Gardiner Healthcare Acquisitions, you can compare the effects of market volatilities on HCM Acquisition and Gardiner Healthcare 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 HCM Acquisition with a short position of Gardiner Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCM Acquisition and Gardiner Healthcare.
Diversification Opportunities for HCM Acquisition and Gardiner Healthcare
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between HCM and Gardiner is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding HCM Acquisition Corp and Gardiner Healthcare Acquisitio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gardiner Healthcare and HCM Acquisition 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 HCM Acquisition Corp are associated (or correlated) with Gardiner Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gardiner Healthcare has no effect on the direction of HCM Acquisition i.e., HCM Acquisition and Gardiner Healthcare go up and down completely randomly.
Pair Corralation between HCM Acquisition and Gardiner Healthcare
Assuming the 90 days horizon HCM Acquisition Corp is expected to generate 2.42 times more return on investment than Gardiner Healthcare. However, HCM Acquisition is 2.42 times more volatile than Gardiner Healthcare Acquisitions. It trades about 0.19 of its potential returns per unit of risk. Gardiner Healthcare Acquisitions is currently generating about 0.1 per unit of risk. If you would invest 1.19 in HCM Acquisition Corp on August 30, 2024 and sell it today you would earn a total of 0.87 from holding HCM Acquisition Corp or generate 73.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 88.42% |
| Values | Daily Returns |
HCM Acquisition Corp vs. Gardiner Healthcare Acquisitio
Performance |
| Timeline |
| HCM Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Gardiner Healthcare |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
HCM Acquisition and Gardiner Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCM Acquisition and Gardiner Healthcare
The main advantage of trading using opposite HCM Acquisition and Gardiner Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCM Acquisition position performs unexpectedly, Gardiner Healthcare 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 Gardiner Healthcare will offset losses from the drop in Gardiner Healthcare's long position.The idea behind HCM Acquisition Corp and Gardiner Healthcare Acquisitions 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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