Correlation Between Alchemy Investments and HUMANA

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

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

Diversification Opportunities for Alchemy Investments and HUMANA

0.39

Correlation Coefficient

Alchemy Investments  HUMANA

Weak diversification

The 3 months correlation between Alchemy and HUMANA is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Alchemy Investments Acquisitio and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and Alchemy Investments 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 Alchemy Investments Acquisition 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 Alchemy Investments i.e., Alchemy Investments and HUMANA go up and down completely randomly.

Pair Corralation between Alchemy Investments and HUMANA

Assuming the 90 days horizon Alchemy Investments Acquisition is expected to generate 0.82 times more return on investment than HUMANA. However, Alchemy Investments Acquisition is 1.22 times less risky than HUMANA. It trades about 0.15 of its potential returns per unit of risk. HUMANA INC is currently generating about -0.02 per unit of risk. If you would invest  1,098  in Alchemy Investments Acquisition on December 2, 2024 and sell it today you would earn a total of  50.00  from holding Alchemy Investments Acquisition or generate 4.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Alchemy Investments Acquisitio  vs.  HUMANA INC

Alchemy Investments

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alchemy Investments Acquisition are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alchemy Investments is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

HUMANA INC

Risk-Adjusted Performance

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alchemy Investments and HUMANA

The main advantage of trading using opposite Alchemy Investments and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alchemy Investments 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 Alchemy Investments Acquisition 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.