Correlation Between Ihuman and 191216CX6

Can any of the company-specific risk be diversified away by investing in both Ihuman and 191216CX6 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 Ihuman and 191216CX6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ihuman Inc and COCA COLA CO, you can compare the effects of market volatilities on Ihuman and 191216CX6 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 Ihuman with a short position of 191216CX6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ihuman and 191216CX6.

Diversification Opportunities for Ihuman and 191216CX6

0.4

Correlation Coefficient

Ihuman  191216CX6

Very weak diversification

The 3 months correlation between Ihuman and 191216CX6 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ihuman Inc and COCA COLA CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A CO and Ihuman 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 Ihuman Inc are associated (or correlated) with 191216CX6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A CO has no effect on the direction of Ihuman i.e., Ihuman and 191216CX6 go up and down completely randomly.

Pair Corralation between Ihuman and 191216CX6

Allowing for the 90-day total investment horizon Ihuman Inc is expected to under-perform the 191216CX6. But the stock apears to be less risky and, when comparing its historical volatility, Ihuman Inc is 12.12 times less risky than 191216CX6. The stock trades about -0.01 of its potential returns per unit of risk. The COCA COLA CO is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7,300  in COCA COLA CO on October 23, 2024 and sell it today you would lose (174.00) from holding COCA COLA CO or give up 2.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.33%
Values	Daily Returns

Ihuman Inc  vs.  COCA COLA CO

Ihuman Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ihuman Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

COCA A CO

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COCA COLA CO are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 191216CX6 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ihuman and 191216CX6

The main advantage of trading using opposite Ihuman and 191216CX6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ihuman position performs unexpectedly, 191216CX6 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 191216CX6 will offset losses from the drop in 191216CX6's long position.

The idea behind Ihuman Inc and COCA COLA CO 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 CEOs Directory module to screen CEOs from public companies around the world.