Correlation Between Ihuman and NISOURCE

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

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

Diversification Opportunities for Ihuman and NISOURCE

-0.19

Correlation Coefficient

Ihuman  NISOURCE

Good diversification

The 3 months correlation between Ihuman and NISOURCE is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ihuman Inc and NISOURCE FIN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISOURCE FIN P 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 NISOURCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISOURCE FIN P has no effect on the direction of Ihuman i.e., Ihuman and NISOURCE go up and down completely randomly.

Pair Corralation between Ihuman and NISOURCE

Allowing for the 90-day total investment horizon Ihuman Inc is expected to generate 4.51 times more return on investment than NISOURCE. However, Ihuman is 4.51 times more volatile than NISOURCE FIN P. It trades about 0.17 of its potential returns per unit of risk. NISOURCE FIN P is currently generating about 0.02 per unit of risk. If you would invest  174.00  in Ihuman Inc on December 23, 2024 and sell it today you would earn a total of  98.00  from holding Ihuman Inc or generate 56.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	52.46%
Values	Daily Returns

Ihuman Inc  vs.  NISOURCE FIN P

Ihuman Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ihuman Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Ihuman demonstrated solid returns over the last few months and may actually be approaching a breakup point.

NISOURCE FIN P

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NISOURCE FIN P are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NISOURCE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ihuman and NISOURCE

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

The idea behind Ihuman Inc and NISOURCE FIN P 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.