Correlation Between Ams AG and HUMANA

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

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

Diversification Opportunities for Ams AG and HUMANA

0.48

Correlation Coefficient

Ams AG  HUMANA

Very weak diversification

The 3 months correlation between Ams and HUMANA is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ams AG and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and Ams AG 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 ams 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 Ams AG i.e., Ams AG and HUMANA go up and down completely randomly.

Pair Corralation between Ams AG and HUMANA

Assuming the 90 days horizon ams AG is expected to under-perform the HUMANA. In addition to that, Ams AG is 11.19 times more volatile than HUMANA INC. It trades about -0.02 of its total potential returns per unit of risk. HUMANA INC is currently generating about 0.13 per unit of volatility. If you would invest  8,071  in HUMANA INC on October 6, 2024 and sell it today you would earn a total of  373.00  from holding HUMANA INC or generate 4.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.56%
Values	Daily Returns

ams AG  vs.  HUMANA INC

ams AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ams AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

HUMANA INC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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 Ams AG and HUMANA

The main advantage of trading using opposite Ams AG and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ams AG 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 ams 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.