Correlation Between Energem Corp and HHL Acquisition

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

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

Diversification Opportunities for Energem Corp and HHL Acquisition

0.57

Correlation Coefficient

Energem Corp  HHL Acquisition

Very weak diversification

The 3 months correlation between Energem and HHL is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Energem Corp Warrant and HHL Acquisition Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HHL Acquisition and Energem Corp 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 Energem Corp Warrant 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 Energem Corp i.e., Energem Corp and HHL Acquisition go up and down completely randomly.

Pair Corralation between Energem Corp and HHL Acquisition

If you would invest  1,049  in HHL Acquisition Co on October 3, 2024 and sell it today you would earn a total of  0.00  from holding HHL Acquisition Co or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Energem Corp Warrant  vs.  HHL Acquisition Co

Energem Corp Warrant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energem Corp Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Energem Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Energem Corp and HHL Acquisition

The main advantage of trading using opposite Energem Corp and HHL Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energem Corp 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 Energem Corp Warrant 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.