Correlation Between Kite Realty and HCM Acquisition

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

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

Diversification Opportunities for Kite Realty and HCM Acquisition

0.0

Correlation Coefficient

Kite Realty  HCM Acquisition

Pay attention - limited upside

The 3 months correlation between Kite and HCM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kite Realty Group 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 Kite Realty 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 Kite Realty Group 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 Kite Realty i.e., Kite Realty and HCM Acquisition go up and down completely randomly.

Pair Corralation between Kite Realty and HCM Acquisition

If you would invest (100.00) in HCM Acquisition Corp on December 26, 2024 and sell it today you would earn a total of  100.00  from holding HCM Acquisition Corp or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Kite Realty Group  vs.  HCM Acquisition Corp

Kite Realty Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kite Realty Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

HCM Acquisition Corp

Risk-Adjusted Performance

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 Kite Realty and HCM Acquisition

The main advantage of trading using opposite Kite Realty and HCM Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kite Realty 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 Kite Realty Group 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.