Correlation Between AdCapital and Humana

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

By analyzing existing cross correlation between AdCapital AG and Humana Inc, you can compare the effects of market volatilities on AdCapital 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 AdCapital with a short position of Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdCapital and Humana.

Diversification Opportunities for AdCapital and Humana

-0.31

Correlation Coefficient

AdCapital  Humana

Very good diversification

The 3 months correlation between AdCapital and Humana is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding AdCapital AG and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and AdCapital 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 AdCapital AG 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 AdCapital i.e., AdCapital and Humana go up and down completely randomly.

Pair Corralation between AdCapital and Humana

Assuming the 90 days horizon AdCapital AG is expected to generate 0.72 times more return on investment than Humana. However, AdCapital AG is 1.4 times less risky than Humana. It trades about -0.02 of its potential returns per unit of risk. Humana Inc is currently generating about -0.1 per unit of risk. If you would invest  222.00  in AdCapital AG on September 15, 2024 and sell it today you would lose (2.00) from holding AdCapital AG or give up 0.9% of portfolio value over 90 days.

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

AdCapital AG  vs.  Humana Inc

AdCapital AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdCapital AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 nearly stable basic indicators, Humana is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AdCapital and Humana

The main advantage of trading using opposite AdCapital and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdCapital 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 AdCapital AG 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 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.