Correlation Between HUMANA and DT Cloud

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

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

Diversification Opportunities for HUMANA and DT Cloud

0.7

Correlation Coefficient

HUMANA  DT Cloud

Poor diversification

The 3 months correlation between HUMANA and DYCQ is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and DT Cloud Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DT Cloud 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 DT Cloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DT Cloud Acquisition has no effect on the direction of HUMANA i.e., HUMANA and DT Cloud go up and down completely randomly.

Pair Corralation between HUMANA and DT Cloud

Assuming the 90 days trading horizon HUMANA INC is expected to generate 4.04 times more return on investment than DT Cloud. However, HUMANA is 4.04 times more volatile than DT Cloud Acquisition. It trades about 0.06 of its potential returns per unit of risk. DT Cloud Acquisition is currently generating about 0.23 per unit of risk. If you would invest  7,982  in HUMANA INC on December 31, 2024 and sell it today you would earn a total of  215.00  from holding HUMANA INC or generate 2.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

HUMANA INC  vs.  DT Cloud Acquisition

HUMANA INC

Risk-Adjusted Performance

Insignificant

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

DT Cloud Acquisition

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DT Cloud Acquisition are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, DT Cloud is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with HUMANA and DT Cloud

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

The idea behind HUMANA INC and DT Cloud 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.