Correlation Between Humasis and INSUN Environmental

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

By analyzing existing cross correlation between Humasis Co and INSUN Environmental New, you can compare the effects of market volatilities on Humasis and INSUN Environmental 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 Humasis with a short position of INSUN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humasis and INSUN Environmental.

Diversification Opportunities for Humasis and INSUN Environmental

-0.43

Correlation Coefficient

Humasis  INSUN Environmental

Very good diversification

The 3 months correlation between Humasis and INSUN is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Humasis Co and INSUN Environmental New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSUN Environmental New and Humasis 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 Humasis Co are associated (or correlated) with INSUN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSUN Environmental New has no effect on the direction of Humasis i.e., Humasis and INSUN Environmental go up and down completely randomly.

Pair Corralation between Humasis and INSUN Environmental

Assuming the 90 days trading horizon Humasis Co is expected to generate 2.38 times more return on investment than INSUN Environmental. However, Humasis is 2.38 times more volatile than INSUN Environmental New. It trades about 0.02 of its potential returns per unit of risk. INSUN Environmental New is currently generating about -0.06 per unit of risk. If you would invest  161,400  in Humasis Co on September 30, 2024 and sell it today you would lose (1,900) from holding Humasis Co or give up 1.18% of portfolio value over 90 days.

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

Humasis Co  vs.  INSUN Environmental New

Humasis

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Humasis Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Humasis may actually be approaching a critical reversion point that can send shares even higher in January 2025.

INSUN Environmental New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INSUN Environmental New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Humasis and INSUN Environmental

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

The idea behind Humasis Co and INSUN Environmental New 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.