Correlation Between HUMANA and Odyssey Semiconductor

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

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

Diversification Opportunities for HUMANA and Odyssey Semiconductor

0.05

Correlation Coefficient

HUMANA  Odyssey Semiconductor

Significant diversification

The 3 months correlation between HUMANA and Odyssey is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Odyssey Semiconductor Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odyssey Semiconductor 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 Odyssey Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odyssey Semiconductor has no effect on the direction of HUMANA i.e., HUMANA and Odyssey Semiconductor go up and down completely randomly.

Pair Corralation between HUMANA and Odyssey Semiconductor

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Odyssey Semiconductor. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 38.83 times less risky than Odyssey Semiconductor. The bond trades about -0.13 of its potential returns per unit of risk. The Odyssey Semiconductor Technologies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Odyssey Semiconductor Technologies on October 4, 2024 and sell it today you would lose (0.50) from holding Odyssey Semiconductor Technologies or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

HUMANA INC  vs.  Odyssey Semiconductor Technolo

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 somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Odyssey Semiconductor

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Odyssey Semiconductor Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile forward indicators, Odyssey Semiconductor demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUMANA and Odyssey Semiconductor

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

The idea behind HUMANA INC and Odyssey Semiconductor Technologies 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.