Correlation Between Ihuman and Westrock Coffee

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

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

Diversification Opportunities for Ihuman and Westrock Coffee

0.11

Correlation Coefficient

Ihuman  Westrock Coffee

Average diversification

The 3 months correlation between Ihuman and Westrock is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ihuman Inc and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee 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 Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of Ihuman i.e., Ihuman and Westrock Coffee go up and down completely randomly.

Pair Corralation between Ihuman and Westrock Coffee

Allowing for the 90-day total investment horizon Ihuman Inc is expected to generate 1.06 times more return on investment than Westrock Coffee. However, Ihuman is 1.06 times more volatile than Westrock Coffee. It trades about 0.13 of its potential returns per unit of risk. Westrock Coffee is currently generating about 0.07 per unit of risk. If you would invest  165.00  in Ihuman Inc on December 29, 2024 and sell it today you would earn a total of  68.00  from holding Ihuman Inc or generate 41.21% return on investment over 90 days.

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

Ihuman Inc  vs.  Westrock Coffee

Ihuman Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ihuman Inc are ranked lower than 10 (%) 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.

Westrock Coffee

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Westrock Coffee are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Westrock Coffee unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ihuman and Westrock Coffee

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

The idea behind Ihuman Inc and Westrock Coffee 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.