Correlation Between Humana and CONMED

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

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

Diversification Opportunities for Humana and CONMED

0.66

Correlation Coefficient

Humana  CONMED

Poor diversification

The 3 months correlation between Humana and CONMED is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and CONMED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONMED 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 CONMED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONMED has no effect on the direction of Humana i.e., Humana and CONMED go up and down completely randomly.

Pair Corralation between Humana and CONMED

Considering the 90-day investment horizon Humana Inc is expected to under-perform the CONMED. In addition to that, Humana is 1.33 times more volatile than CONMED. It trades about -0.08 of its total potential returns per unit of risk. CONMED is currently generating about 0.04 per unit of volatility. If you would invest  7,097  in CONMED on September 1, 2024 and sell it today you would earn a total of  307.00  from holding CONMED or generate 4.33% return on investment over 90 days.

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

Humana Inc  vs.  CONMED

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. In spite of abnormal performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the ETF investors.

CONMED

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CONMED are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, CONMED is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Humana and CONMED

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

The idea behind Humana Inc and CONMED 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.