Correlation Between Constellation Brands and Ihuman

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

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

Diversification Opportunities for Constellation Brands and Ihuman

-0.01

Correlation Coefficient

Constellation Brands  Ihuman

Good diversification

The 3 months correlation between Constellation and Ihuman is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Ihuman Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ihuman Inc and Constellation Brands 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 Constellation Brands Class are associated (or correlated) with Ihuman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ihuman Inc has no effect on the direction of Constellation Brands i.e., Constellation Brands and Ihuman go up and down completely randomly.

Pair Corralation between Constellation Brands and Ihuman

Considering the 90-day investment horizon Constellation Brands Class is expected to under-perform the Ihuman. But the stock apears to be less risky and, when comparing its historical volatility, Constellation Brands Class is 3.05 times less risky than Ihuman. The stock trades about -0.05 of its potential returns per unit of risk. The Ihuman Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  150.00  in Ihuman Inc on September 13, 2024 and sell it today you would earn a total of  23.00  from holding Ihuman Inc or generate 15.33% return on investment over 90 days.

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

Constellation Brands Class  vs.  Ihuman Inc

Constellation Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Constellation Brands Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Constellation Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ihuman Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ihuman Inc are ranked lower than 5 (%) 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.

Pair Trading with Constellation Brands and Ihuman

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

The idea behind Constellation Brands Class and Ihuman 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.