Correlation Between HUMANA and Distoken Acquisition

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

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

Diversification Opportunities for HUMANA and Distoken Acquisition

-0.62

Correlation Coefficient

HUMANA  Distoken Acquisition

Excellent diversification

The 3 months correlation between HUMANA and Distoken is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Distoken Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distoken Acquisition 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 Distoken Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distoken Acquisition has no effect on the direction of HUMANA i.e., HUMANA and Distoken Acquisition go up and down completely randomly.

Pair Corralation between HUMANA and Distoken Acquisition

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Distoken Acquisition. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 11.61 times less risky than Distoken Acquisition. The bond trades about -0.15 of its potential returns per unit of risk. The Distoken Acquisition is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Distoken Acquisition on August 31, 2024 and sell it today you would earn a total of  0.00  from holding Distoken Acquisition or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	19.35%
Values	Daily Returns

HUMANA INC  vs.  Distoken Acquisition

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.

Distoken Acquisition

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Distoken Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Distoken Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUMANA and Distoken Acquisition

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

The idea behind HUMANA INC and Distoken Acquisition 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.