Correlation Between Spring Valley and HCM II

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

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

Diversification Opportunities for Spring Valley and HCM II

-0.19

Correlation Coefficient

Spring Valley  HCM II

Good diversification

The 3 months correlation between Spring and HCM is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Spring Valley Acquisition and HCM II Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCM II Acquisition and Spring Valley 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 Spring Valley Acquisition are associated (or correlated) with HCM II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCM II Acquisition has no effect on the direction of Spring Valley i.e., Spring Valley and HCM II go up and down completely randomly.

Pair Corralation between Spring Valley and HCM II

Given the investment horizon of 90 days Spring Valley Acquisition is expected to generate 0.39 times more return on investment than HCM II. However, Spring Valley Acquisition is 2.56 times less risky than HCM II. It trades about 0.05 of its potential returns per unit of risk. HCM II Acquisition is currently generating about 0.01 per unit of risk. If you would invest  1,167  in Spring Valley Acquisition on May 9, 2025 and sell it today you would earn a total of  20.00  from holding Spring Valley Acquisition or generate 1.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Spring Valley Acquisition  vs.  HCM II Acquisition

Spring Valley Acquisition

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Spring Valley Acquisition are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Spring Valley is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

HCM II Acquisition

Risk-Adjusted Performance

Weak

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

Pair Trading with Spring Valley and HCM II

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

The idea behind Spring Valley Acquisition and HCM II Acquisition 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.