Correlation Between HUMANA and Datametrex

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

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

Diversification Opportunities for HUMANA and Datametrex

0.13

Correlation Coefficient

HUMANA  Datametrex

Average diversification

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

Pair Corralation between HUMANA and Datametrex

Assuming the 90 days trading horizon HUMANA INC is expected to generate 4.92 times more return on investment than Datametrex. However, HUMANA is 4.92 times more volatile than Datametrex AI Limited. It trades about 0.07 of its potential returns per unit of risk. Datametrex AI Limited is currently generating about 0.04 per unit of risk. If you would invest  8,175  in HUMANA INC on October 5, 2024 and sell it today you would earn a total of  269.00  from holding HUMANA INC or generate 3.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.34%
Values	Daily Returns

HUMANA INC  vs.  Datametrex AI Limited

HUMANA INC

Risk-Adjusted Performance

4 of 100

Very Weak

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

Datametrex AI Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Datametrex AI Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Datametrex reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUMANA and Datametrex

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

The idea behind HUMANA INC and Datametrex AI Limited 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.