Correlation Between HUMANA and Cromwell Property

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

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

Diversification Opportunities for HUMANA and Cromwell Property

-0.18

Correlation Coefficient

HUMANA  Cromwell Property

Good diversification

The 3 months correlation between HUMANA and Cromwell is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Cromwell Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cromwell Property 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 Cromwell Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cromwell Property has no effect on the direction of HUMANA i.e., HUMANA and Cromwell Property go up and down completely randomly.

Pair Corralation between HUMANA and Cromwell Property

Assuming the 90 days trading horizon HUMANA INC is expected to generate 94.63 times more return on investment than Cromwell Property. However, HUMANA is 94.63 times more volatile than Cromwell Property Group. It trades about 0.08 of its potential returns per unit of risk. Cromwell Property Group is currently generating about 0.0 per unit of risk. If you would invest  7,891  in HUMANA INC on October 22, 2024 and sell it today you would earn a total of  553.00  from holding HUMANA INC or generate 7.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.21%
Values	Daily Returns

HUMANA INC  vs.  Cromwell Property Group

HUMANA INC

Risk-Adjusted Performance

6 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 6 (%) 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.

Cromwell Property

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cromwell Property Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Cromwell Property 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 Cromwell Property

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

The idea behind HUMANA INC and Cromwell Property Group 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.