Correlation Between HCM Acquisition and Weibo Corp

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

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

Diversification Opportunities for HCM Acquisition and Weibo Corp

0.12

Correlation Coefficient

HCM Acquisition  Weibo Corp

Average diversification

The 3 months correlation between HCM and Weibo is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding HCM Acquisition Corp and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and HCM Acquisition 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 HCM Acquisition Corp are associated (or correlated) with Weibo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weibo Corp has no effect on the direction of HCM Acquisition i.e., HCM Acquisition and Weibo Corp go up and down completely randomly.

Pair Corralation between HCM Acquisition and Weibo Corp

If you would invest  837.00  in Weibo Corp on September 3, 2024 and sell it today you would earn a total of  123.00  from holding Weibo Corp or generate 14.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.8%
Values	Daily Returns

HCM Acquisition Corp  vs.  Weibo Corp

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.

Weibo Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Weibo Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Weibo Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HCM Acquisition and Weibo Corp

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

The idea behind HCM Acquisition Corp and Weibo 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.