Correlation Between Helius Medical and HNR Acquisition

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

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

Diversification Opportunities for Helius Medical and HNR Acquisition

-0.61

Correlation Coefficient

Helius Medical  HNR Acquisition

Excellent diversification

The 3 months correlation between Helius and HNR is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Helius Medical Technologies and HNR Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNR Acquisition Corp and Helius Medical 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 Helius Medical Technologies are associated (or correlated) with HNR Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNR Acquisition Corp has no effect on the direction of Helius Medical i.e., Helius Medical and HNR Acquisition go up and down completely randomly.

Pair Corralation between Helius Medical and HNR Acquisition

Given the investment horizon of 90 days Helius Medical Technologies is expected to under-perform the HNR Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Helius Medical Technologies is 1.33 times less risky than HNR Acquisition. The stock trades about -0.05 of its potential returns per unit of risk. The HNR Acquisition Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,031  in HNR Acquisition Corp on October 3, 2024 and sell it today you would lose (924.00) from holding HNR Acquisition Corp or give up 89.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	76.97%
Values	Daily Returns

Helius Medical Technologies  vs.  HNR Acquisition Corp

Helius Medical Techn

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Helius Medical Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Helius Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

HNR Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HNR Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HNR 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 Helius Medical and HNR Acquisition

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

The idea behind Helius Medical Technologies and HNR 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.