Correlation Between Humanica Public and Carabao Group

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

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

Diversification Opportunities for Humanica Public and Carabao Group

-0.38

Correlation Coefficient

Humanica Public  Carabao Group

Very good diversification

The 3 months correlation between Humanica and Carabao is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Humanica Public and Carabao Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carabao Group Public and Humanica Public 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 Humanica Public are associated (or correlated) with Carabao Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carabao Group Public has no effect on the direction of Humanica Public i.e., Humanica Public and Carabao Group go up and down completely randomly.

Pair Corralation between Humanica Public and Carabao Group

Assuming the 90 days trading horizon Humanica Public is expected to generate 1.16 times more return on investment than Carabao Group. However, Humanica Public is 1.16 times more volatile than Carabao Group Public. It trades about -0.01 of its potential returns per unit of risk. Carabao Group Public is currently generating about -0.17 per unit of risk. If you would invest  840.00  in Humanica Public on December 29, 2024 and sell it today you would lose (35.00) from holding Humanica Public or give up 4.17% of portfolio value over 90 days.

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

Humanica Public  vs.  Carabao Group Public

Humanica Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Humanica Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Humanica Public is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Carabao Group Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carabao Group Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Humanica Public and Carabao Group

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

The idea behind Humanica Public and Carabao Group Public 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.