Correlation Between HUMANA and Iofina Plc

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

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

Diversification Opportunities for HUMANA and Iofina Plc

0.19

Correlation Coefficient

HUMANA  Iofina Plc

Average diversification

The 3 months correlation between HUMANA and Iofina is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Iofina plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iofina plc 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 Iofina Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iofina plc has no effect on the direction of HUMANA i.e., HUMANA and Iofina Plc go up and down completely randomly.

Pair Corralation between HUMANA and Iofina Plc

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Iofina Plc. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 8.25 times less risky than Iofina Plc. The bond trades about -0.07 of its potential returns per unit of risk. The Iofina plc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Iofina plc on November 28, 2024 and sell it today you would earn a total of  4.00  from holding Iofina plc or generate 16.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

HUMANA INC  vs.  Iofina plc

HUMANA INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Iofina plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Iofina plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Iofina Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUMANA and Iofina Plc

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

The idea behind HUMANA INC and Iofina plc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.