Correlation Between HUMANA and CK Hutchison

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

By analyzing existing cross correlation between HUMANA INC and CK Hutchison Holdings, you can compare the effects of market volatilities on HUMANA and CK Hutchison 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 CK Hutchison. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and CK Hutchison.

Diversification Opportunities for HUMANA and CK Hutchison

0.29

Correlation Coefficient

HUMANA  CK Hutchison

Modest diversification

The 3 months correlation between HUMANA and CKHUY is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and CK Hutchison Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK Hutchison Holdings 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 CK Hutchison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CK Hutchison Holdings has no effect on the direction of HUMANA i.e., HUMANA and CK Hutchison go up and down completely randomly.

Pair Corralation between HUMANA and CK Hutchison

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the CK Hutchison. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 2.43 times less risky than CK Hutchison. The bond trades about -0.09 of its potential returns per unit of risk. The CK Hutchison Holdings is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  534.00  in CK Hutchison Holdings on September 3, 2024 and sell it today you would lose (16.00) from holding CK Hutchison Holdings or give up 3.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

HUMANA INC  vs.  CK Hutchison Holdings

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 somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

CK Hutchison Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with HUMANA and CK Hutchison

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

The idea behind HUMANA INC and CK Hutchison Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..