Correlation Between HUMANA and Flow Capital

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

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

Diversification Opportunities for HUMANA and Flow Capital

-0.13

Correlation Coefficient

HUMANA  Flow Capital

Good diversification

The 3 months correlation between HUMANA and Flow is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Flow Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Capital Corp and HUMANA 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 HUMANA INC are associated (or correlated) with Flow Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Capital Corp has no effect on the direction of HUMANA i.e., HUMANA and Flow Capital go up and down completely randomly.

Pair Corralation between HUMANA and Flow Capital

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Flow Capital. In addition to that, HUMANA is 3.83 times more volatile than Flow Capital Corp. It trades about -0.19 of its total potential returns per unit of risk. Flow Capital Corp is currently generating about -0.12 per unit of volatility. If you would invest  61.00  in Flow Capital Corp on September 16, 2024 and sell it today you would lose (1.00) from holding Flow Capital Corp or give up 1.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

HUMANA INC  vs.  Flow Capital Corp

HUMANA INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HUMANA INC investors.

Flow Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flow Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Flow Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HUMANA and Flow Capital

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

The idea behind HUMANA INC and Flow Capital Corp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.