Correlation Between Humana and 3D Printing

Can any of the company-specific risk be diversified away by investing in both Humana and 3D Printing 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 3D Printing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Humana Inc and The 3D Printing, you can compare the effects of market volatilities on Humana and 3D Printing 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 3D Printing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and 3D Printing.

Diversification Opportunities for Humana and 3D Printing

0.4

Correlation Coefficient

Humana  3D Printing

Very weak diversification

The 3 months correlation between Humana and PRNT is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and The 3D Printing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3D Printing 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 3D Printing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3D Printing has no effect on the direction of Humana i.e., Humana and 3D Printing go up and down completely randomly.

Pair Corralation between Humana and 3D Printing

Considering the 90-day investment horizon Humana Inc is expected to generate 1.52 times more return on investment than 3D Printing. However, Humana is 1.52 times more volatile than The 3D Printing. It trades about 0.06 of its potential returns per unit of risk. The 3D Printing is currently generating about -0.06 per unit of risk. If you would invest  25,475  in Humana Inc on December 27, 2024 and sell it today you would earn a total of  1,573  from holding Humana Inc or generate 6.17% return on investment over 90 days.

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

Humana Inc  vs.  The 3D Printing

Humana Inc

Risk-Adjusted Performance

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. In spite of very abnormal basic indicators, Humana may actually be approaching a critical reversion point that can send shares even higher in April 2025.

3D Printing

Risk-Adjusted Performance

Very Weak

Over the last 90 days The 3D Printing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, 3D Printing is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Humana and 3D Printing

The main advantage of trading using opposite Humana and 3D Printing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, 3D Printing 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 3D Printing will offset losses from the drop in 3D Printing's long position.

The idea behind Humana Inc and The 3D Printing 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.