Correlation Between Ares AcquisitionII and HHL Acquisition

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

By analyzing existing cross correlation between Ares Acquisition and HHL Acquisition Co, you can compare the effects of market volatilities on Ares AcquisitionII and HHL 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 Ares AcquisitionII with a short position of HHL Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares AcquisitionII and HHL Acquisition.

Diversification Opportunities for Ares AcquisitionII and HHL Acquisition

0.0

Correlation Coefficient

Ares AcquisitionII  HHL Acquisition

Pay attention - limited upside

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

Pair Corralation between Ares AcquisitionII and HHL Acquisition

If you would invest  1,099  in Ares Acquisition on October 6, 2024 and sell it today you would earn a total of  11.00  from holding Ares Acquisition or generate 1.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Ares Acquisition  vs.  HHL Acquisition Co

Ares AcquisitionII

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Acquisition are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Ares AcquisitionII is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

HHL Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HHL Acquisition Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, HHL Acquisition is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ares AcquisitionII and HHL Acquisition

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

The idea behind Ares Acquisition and HHL Acquisition Co 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.