Correlation Between HUMANA and OneSoft Solutions

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

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

Diversification Opportunities for HUMANA and OneSoft Solutions

-0.47

Correlation Coefficient

HUMANA  OneSoft Solutions

Very good diversification

The 3 months correlation between HUMANA and OneSoft is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and OneSoft Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneSoft Solutions 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 OneSoft Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneSoft Solutions has no effect on the direction of HUMANA i.e., HUMANA and OneSoft Solutions go up and down completely randomly.

Pair Corralation between HUMANA and OneSoft Solutions

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the OneSoft Solutions. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 1.63 times less risky than OneSoft Solutions. The bond trades about -0.09 of its potential returns per unit of risk. The OneSoft Solutions is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  62.00  in OneSoft Solutions on September 3, 2024 and sell it today you would earn a total of  1.00  from holding OneSoft Solutions or generate 1.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	79.03%
Values	Daily Returns

HUMANA INC  vs.  OneSoft Solutions

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.

OneSoft Solutions

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OneSoft Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, OneSoft Solutions is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HUMANA and OneSoft Solutions

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

The idea behind HUMANA INC and OneSoft Solutions 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.