Correlation Between LENSAR and HUMANA

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

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

Diversification Opportunities for LENSAR and HUMANA

-0.4

Correlation Coefficient

LENSAR  HUMANA

Very good diversification

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

Pair Corralation between LENSAR and HUMANA

Given the investment horizon of 90 days LENSAR Inc is expected to generate 4.69 times more return on investment than HUMANA. However, LENSAR is 4.69 times more volatile than HUMANA INC. It trades about 0.25 of its potential returns per unit of risk. HUMANA INC is currently generating about 0.13 per unit of risk. If you would invest  579.00  in LENSAR Inc on October 6, 2024 and sell it today you would earn a total of  286.00  from holding LENSAR Inc or generate 49.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.56%
Values	Daily Returns

LENSAR Inc  vs.  HUMANA INC

LENSAR Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

HUMANA INC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LENSAR and HUMANA

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

The idea behind LENSAR Inc and HUMANA INC 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.