Correlation Between Humble Group and Cell Impact

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

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

Diversification Opportunities for Humble Group and Cell Impact

0.37

Correlation Coefficient

Humble Group  Cell Impact

Weak diversification

The 3 months correlation between Humble and Cell is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Humble Group AB and Cell Impact AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cell Impact AB and Humble Group 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 Humble Group AB are associated (or correlated) with Cell Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cell Impact AB has no effect on the direction of Humble Group i.e., Humble Group and Cell Impact go up and down completely randomly.

Pair Corralation between Humble Group and Cell Impact

Assuming the 90 days trading horizon Humble Group AB is expected to generate 0.55 times more return on investment than Cell Impact. However, Humble Group AB is 1.81 times less risky than Cell Impact. It trades about 0.06 of its potential returns per unit of risk. Cell Impact AB is currently generating about -0.08 per unit of risk. If you would invest  1,042  in Humble Group AB on September 23, 2024 and sell it today you would earn a total of  188.00  from holding Humble Group AB or generate 18.04% return on investment over 90 days.

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

Humble Group AB  vs.  Cell Impact AB

Humble Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Humble Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Humble Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Cell Impact AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cell Impact AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Humble Group and Cell Impact

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

The idea behind Humble Group AB and Cell Impact 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.