Correlation Between Suntory Beverage and HCM Acquisition

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Can any of the company-specific risk be diversified away by investing in both Suntory Beverage 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 Suntory Beverage and HCM Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suntory Beverage Food and HCM Acquisition Corp, you can compare the effects of market volatilities on Suntory Beverage 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 Suntory Beverage with a short position of HCM Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suntory Beverage and HCM Acquisition.

Diversification Opportunities for Suntory Beverage and HCM Acquisition

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between Suntory and HCM is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food 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 Suntory Beverage 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 Suntory Beverage Food 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 Suntory Beverage i.e., Suntory Beverage and HCM Acquisition go up and down completely randomly.

Pair Corralation between Suntory Beverage and HCM Acquisition

Assuming the 90 days horizon Suntory Beverage Food is expected to under-perform the HCM Acquisition. In addition to that, Suntory Beverage is 3.84 times more volatile than HCM Acquisition Corp. It trades about 0.0 of its total potential returns per unit of risk. HCM Acquisition Corp is currently generating about 0.1 per unit of volatility. If you would invest  1,023  in HCM Acquisition Corp on October 11, 2024 and sell it today you would earn a total of  54.00  from holding HCM Acquisition Corp or generate 5.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy25.45%
ValuesDaily Returns

Suntory Beverage Food  vs.  HCM Acquisition Corp

 Performance 
       Timeline  
Suntory Beverage Food 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Suntory Beverage Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
HCM Acquisition Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Suntory Beverage and HCM Acquisition Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Suntory Beverage and HCM Acquisition

The main advantage of trading using opposite Suntory Beverage and HCM Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suntory Beverage 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 Suntory Beverage Food 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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