Correlation Between Spring Valley and Hawaiian Electric

Can any of the company-specific risk be diversified away by investing in both Spring Valley and Hawaiian Electric 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 Hawaiian Electric 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 Hawaiian Electric Industries, you can compare the effects of market volatilities on Spring Valley and Hawaiian Electric 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 Hawaiian Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spring Valley and Hawaiian Electric.

Diversification Opportunities for Spring Valley and Hawaiian Electric

-0.04

Correlation Coefficient

Spring Valley  Hawaiian Electric

Good diversification

The 3 months correlation between Spring and Hawaiian is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Spring Valley Acquisition and Hawaiian Electric Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawaiian Electric 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 Hawaiian Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawaiian Electric has no effect on the direction of Spring Valley i.e., Spring Valley and Hawaiian Electric go up and down completely randomly.

Pair Corralation between Spring Valley and Hawaiian Electric

Assuming the 90 days horizon Spring Valley Acquisition is expected to generate 9.84 times more return on investment than Hawaiian Electric. However, Spring Valley is 9.84 times more volatile than Hawaiian Electric Industries. It trades about 0.23 of its potential returns per unit of risk. Hawaiian Electric Industries is currently generating about 0.04 per unit of risk. If you would invest  8.95  in Spring Valley Acquisition on May 3, 2025 and sell it today you would earn a total of  19.05  from holding Spring Valley Acquisition or generate 212.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.97%
Values	Daily Returns

Spring Valley Acquisition  vs.  Hawaiian Electric Industries

Spring Valley Acquisition

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Spring Valley Acquisition are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting forward indicators, Spring Valley reported solid returns over the last few months and may actually be approaching a breakup point.

Hawaiian Electric

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hawaiian Electric Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Hawaiian Electric is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Spring Valley and Hawaiian Electric

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

The idea behind Spring Valley Acquisition and Hawaiian Electric Industries 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.