Correlation Between Finebesteel and HMCIB SPAC

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

By analyzing existing cross correlation between Finebesteel and HMCIB SPAC 3, you can compare the effects of market volatilities on Finebesteel and HMCIB SPAC 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 Finebesteel with a short position of HMCIB SPAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finebesteel and HMCIB SPAC.

Diversification Opportunities for Finebesteel and HMCIB SPAC

-0.32

Correlation Coefficient

Finebesteel  HMCIB SPAC

Very good diversification

The 3 months correlation between Finebesteel and HMCIB is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and HMCIB SPAC 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMCIB SPAC 3 and Finebesteel 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 Finebesteel are associated (or correlated) with HMCIB SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMCIB SPAC 3 has no effect on the direction of Finebesteel i.e., Finebesteel and HMCIB SPAC go up and down completely randomly.

Pair Corralation between Finebesteel and HMCIB SPAC

Assuming the 90 days trading horizon Finebesteel is expected to under-perform the HMCIB SPAC. In addition to that, Finebesteel is 1.2 times more volatile than HMCIB SPAC 3. It trades about -0.02 of its total potential returns per unit of risk. HMCIB SPAC 3 is currently generating about 0.1 per unit of volatility. If you would invest  142,600  in HMCIB SPAC 3 on October 20, 2024 and sell it today you would earn a total of  3,200  from holding HMCIB SPAC 3 or generate 2.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.0%
Values	Daily Returns

Finebesteel  vs.  HMCIB SPAC 3

Finebesteel

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Finebesteel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Finebesteel sustained solid returns over the last few months and may actually be approaching a breakup point.

HMCIB SPAC 3

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HMCIB SPAC 3 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Finebesteel and HMCIB SPAC

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

The idea behind Finebesteel and HMCIB SPAC 3 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.