Correlation Between Stereo Vision and HUMANA

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

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

Diversification Opportunities for Stereo Vision and HUMANA

0.25

Correlation Coefficient

Stereo Vision  HUMANA

Modest diversification

The 3 months correlation between Stereo and HUMANA is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Stereo Vision Entertainment and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and Stereo Vision 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 Stereo Vision Entertainment 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 Stereo Vision i.e., Stereo Vision and HUMANA go up and down completely randomly.

Pair Corralation between Stereo Vision and HUMANA

Given the investment horizon of 90 days Stereo Vision Entertainment is expected to generate 7.93 times more return on investment than HUMANA. However, Stereo Vision is 7.93 times more volatile than HUMANA INC. It trades about 0.13 of its potential returns per unit of risk. HUMANA INC is currently generating about 0.05 per unit of risk. If you would invest  0.02  in Stereo Vision Entertainment on December 29, 2024 and sell it today you would earn a total of  0.01  from holding Stereo Vision Entertainment or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Stereo Vision Entertainment  vs.  HUMANA INC

Stereo Vision Entert

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stereo Vision Entertainment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very sluggish basic indicators, Stereo Vision displayed solid returns over the last few months and may actually be approaching a breakup point.

HUMANA INC

Risk-Adjusted Performance

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stereo Vision and HUMANA

The main advantage of trading using opposite Stereo Vision and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stereo Vision 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 Stereo Vision Entertainment 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.