Correlation Between 51Talk Online and HCM Acquisition

Can any of the company-specific risk be diversified away by investing in both 51Talk Online 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 51Talk Online and HCM Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 51Talk Online Education and HCM Acquisition Corp, you can compare the effects of market volatilities on 51Talk Online 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 51Talk Online with a short position of HCM Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of 51Talk Online and HCM Acquisition.

Diversification Opportunities for 51Talk Online and HCM Acquisition

0.67

Correlation Coefficient

51Talk Online  HCM Acquisition

Poor diversification

The 3 months correlation between 51Talk and HCM is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding 51Talk Online Education 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 51Talk Online 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 51Talk Online Education 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 51Talk Online i.e., 51Talk Online and HCM Acquisition go up and down completely randomly.

Pair Corralation between 51Talk Online and HCM Acquisition

Considering the 90-day investment horizon 51Talk Online Education is expected to generate 10.41 times more return on investment than HCM Acquisition. However, 51Talk Online is 10.41 times more volatile than HCM Acquisition Corp. It trades about 0.08 of its potential returns per unit of risk. HCM Acquisition Corp is currently generating about 0.1 per unit of risk. If you would invest  603.00  in 51Talk Online Education on October 7, 2024 and sell it today you would earn a total of  1,366  from holding 51Talk Online Education or generate 226.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	26.01%
Values	Daily Returns

51Talk Online Education  vs.  HCM Acquisition Corp

51Talk Online Education

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 51Talk Online Education are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, 51Talk Online exhibited solid returns over the last few months and may actually be approaching a breakup point.

HCM Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HCM Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HCM Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with 51Talk Online and HCM Acquisition

The main advantage of trading using opposite 51Talk Online and HCM Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 51Talk Online 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.

The idea behind 51Talk Online Education and HCM Acquisition Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.