Correlation Between CP ALL and HUMANA

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

By analyzing existing cross correlation between CP ALL Public and HUMANA INC, you can compare the effects of market volatilities on CP ALL and HUMANA 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 CP ALL with a short position of HUMANA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CP ALL and HUMANA.

Diversification Opportunities for CP ALL and HUMANA

-0.17

Correlation Coefficient

CP ALL  HUMANA

Good diversification

The 3 months correlation between CVPBF and HUMANA is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and CP ALL 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 CP ALL Public are associated (or correlated) with HUMANA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUMANA INC has no effect on the direction of CP ALL i.e., CP ALL and HUMANA go up and down completely randomly.

Pair Corralation between CP ALL and HUMANA

If you would invest  206.00  in CP ALL Public on July 24, 2024 and sell it today you would earn a total of  0.00  from holding CP ALL Public or generate 0.0% return on investment over 90 days.

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

CP ALL Public  vs.  HUMANA INC

CP ALL Public

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CP ALL Public are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental drivers, CP ALL reported solid returns over the last few months and may actually be approaching a breakup point.

HUMANA INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CP ALL and HUMANA

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

The idea behind CP ALL Public and HUMANA INC 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.