Correlation Between Mullen Automotive and HCM Acquisition
Can any of the company-specific risk be diversified away by investing in both Mullen Automotive 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 Mullen Automotive and HCM Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mullen Automotive and HCM Acquisition Corp, you can compare the effects of market volatilities on Mullen Automotive 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 Mullen Automotive with a short position of HCM Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mullen Automotive and HCM Acquisition.
Diversification Opportunities for Mullen Automotive and HCM Acquisition
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mullen and HCM is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Mullen Automotive 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 Mullen Automotive 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 Mullen Automotive 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 Mullen Automotive i.e., Mullen Automotive and HCM Acquisition go up and down completely randomly.
Pair Corralation between Mullen Automotive and HCM Acquisition
Given the investment horizon of 90 days Mullen Automotive is expected to under-perform the HCM Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Mullen Automotive is 4.72 times less risky than HCM Acquisition. The stock trades about -0.13 of its potential returns per unit of risk. The 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 Against |
| Strength | Very Weak |
| Accuracy | 17.1% |
| Values | Daily Returns |
Mullen Automotive vs. HCM Acquisition Corp
Performance |
| Timeline |
| Mullen Automotive |
| HCM Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Mullen Automotive and HCM Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mullen Automotive and HCM Acquisition
The main advantage of trading using opposite Mullen Automotive and HCM Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mullen Automotive 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.| Mullen Automotive vs. Hycroft Mining Holding | Mullen Automotive vs. Imperial Petroleum | Mullen Automotive vs. Camber Energy |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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