Correlation Between Humana and Medicover

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

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

Diversification Opportunities for Humana and Medicover

-0.13

Correlation Coefficient

Humana  Medicover

Good diversification

The 3 months correlation between Humana and Medicover is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Medicover AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicover AB and Humana 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 Humana Inc are associated (or correlated) with Medicover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicover AB has no effect on the direction of Humana i.e., Humana and Medicover go up and down completely randomly.

Pair Corralation between Humana and Medicover

Assuming the 90 days horizon Humana is expected to generate 2.02 times less return on investment than Medicover. In addition to that, Humana is 1.25 times more volatile than Medicover AB. It trades about 0.03 of its total potential returns per unit of risk. Medicover AB is currently generating about 0.08 per unit of volatility. If you would invest  1,654  in Medicover AB on December 30, 2024 and sell it today you would earn a total of  136.00  from holding Medicover AB or generate 8.22% return on investment over 90 days.

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

Humana Inc  vs.  Medicover AB

Humana Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Humana Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Humana is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Medicover AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Medicover AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Medicover may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Humana and Medicover

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

The idea behind Humana Inc and Medicover AB 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.