Correlation Between HUMANA and Metal Sky

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

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

Diversification Opportunities for HUMANA and Metal Sky

-0.56

Correlation Coefficient

HUMANA  Metal Sky

Excellent diversification

The 3 months correlation between HUMANA and Metal is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Metal Sky Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metal Sky Star 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 Metal Sky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metal Sky Star has no effect on the direction of HUMANA i.e., HUMANA and Metal Sky go up and down completely randomly.

Pair Corralation between HUMANA and Metal Sky

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Metal Sky. In addition to that, HUMANA is 1.05 times more volatile than Metal Sky Star. It trades about -0.16 of its total potential returns per unit of risk. Metal Sky Star is currently generating about 0.08 per unit of volatility. If you would invest  1,136  in Metal Sky Star on September 13, 2024 and sell it today you would earn a total of  52.00  from holding Metal Sky Star or generate 4.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

HUMANA INC  vs.  Metal Sky Star

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 uncertain 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.

Metal Sky Star

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Metal Sky Star are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Metal Sky is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HUMANA and Metal Sky

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

The idea behind HUMANA INC and Metal Sky Star 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.