Correlation Between Humanwell Healthcare and SAIC

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

By analyzing existing cross correlation between Humanwell Healthcare Group and SAIC Motor Corp, you can compare the effects of market volatilities on Humanwell Healthcare and SAIC 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 Humanwell Healthcare with a short position of SAIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humanwell Healthcare and SAIC.

Diversification Opportunities for Humanwell Healthcare and SAIC

0.74

Correlation Coefficient

Humanwell Healthcare  SAIC

Poor diversification

The 3 months correlation between Humanwell and SAIC is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Humanwell Healthcare Group and SAIC Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAIC Motor Corp and Humanwell Healthcare 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 Humanwell Healthcare Group are associated (or correlated) with SAIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAIC Motor Corp has no effect on the direction of Humanwell Healthcare i.e., Humanwell Healthcare and SAIC go up and down completely randomly.

Pair Corralation between Humanwell Healthcare and SAIC

Assuming the 90 days trading horizon Humanwell Healthcare is expected to generate 7.23 times less return on investment than SAIC. But when comparing it to its historical volatility, Humanwell Healthcare Group is 1.79 times less risky than SAIC. It trades about 0.04 of its potential returns per unit of risk. SAIC Motor Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,491  in SAIC Motor Corp on October 3, 2024 and sell it today you would earn a total of  585.00  from holding SAIC Motor Corp or generate 39.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Humanwell Healthcare Group  vs.  SAIC Motor Corp

Humanwell Healthcare

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Humanwell Healthcare Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Humanwell Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SAIC Motor Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SAIC Motor Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SAIC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Humanwell Healthcare and SAIC

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

The idea behind Humanwell Healthcare Group and SAIC Motor 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.