Correlation Between HUMANA and Futuretech

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

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

Diversification Opportunities for HUMANA and Futuretech

-0.21

Correlation Coefficient

HUMANA  Futuretech

Very good diversification

The 3 months correlation between HUMANA and Futuretech is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Futuretech II Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futuretech II 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 Futuretech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futuretech II Acquisition has no effect on the direction of HUMANA i.e., HUMANA and Futuretech go up and down completely randomly.

Pair Corralation between HUMANA and Futuretech

Assuming the 90 days trading horizon HUMANA is expected to generate 28.26 times less return on investment than Futuretech. But when comparing it to its historical volatility, HUMANA INC is 1.15 times less risky than Futuretech. It trades about 0.0 of its potential returns per unit of risk. Futuretech II Acquisition is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,009  in Futuretech II Acquisition on September 12, 2024 and sell it today you would earn a total of  186.00  from holding Futuretech II Acquisition or generate 18.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.58%
Values	Daily Returns

HUMANA INC  vs.  Futuretech II 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 weak 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.

Futuretech II Acquisition

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Futuretech II Acquisition are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, Futuretech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HUMANA and Futuretech

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

The idea behind HUMANA INC and Futuretech II 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.