Correlation Between Sealed Air and HCM Acquisition

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

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

Diversification Opportunities for Sealed Air and HCM Acquisition

0.0

Correlation Coefficient

Sealed Air  HCM Acquisition

Pay attention - limited upside

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

Pair Corralation between Sealed Air and HCM Acquisition

Considering the 90-day investment horizon Sealed Air is expected to under-perform the HCM Acquisition. In addition to that, Sealed Air is 4.92 times more volatile than HCM Acquisition Corp. It trades about -0.03 of its total potential returns per unit of risk. HCM Acquisition Corp is currently generating about 0.09 per unit of volatility. If you would invest  1,032  in HCM Acquisition Corp on October 25, 2024 and sell it today you would earn a total of  45.00  from holding HCM Acquisition Corp or generate 4.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	23.53%
Values	Daily Returns

Sealed Air  vs.  HCM Acquisition Corp

Sealed Air

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Sealed Air has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Sealed Air is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Sealed Air and HCM Acquisition

The main advantage of trading using opposite Sealed Air and HCM Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air 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 Sealed Air 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 CEOs Directory module to screen CEOs from public companies around the world.