Correlation Between HUMANA and PHI

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

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

Diversification Opportunities for HUMANA and PHI

0.53

Correlation Coefficient

HUMANA  PHI

Very weak diversification

The 3 months correlation between HUMANA and PHI is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and PHI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHI Group 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 PHI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHI Group has no effect on the direction of HUMANA i.e., HUMANA and PHI go up and down completely randomly.

Pair Corralation between HUMANA and PHI

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the PHI. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 49.56 times less risky than PHI. The bond trades about -0.15 of its potential returns per unit of risk. The PHI Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.03  in PHI Group on September 2, 2024 and sell it today you would lose (0.01) from holding PHI Group or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

HUMANA INC  vs.  PHI Group

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.

PHI Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PHI Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward indicators, PHI disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUMANA and PHI

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

The idea behind HUMANA INC and PHI Group 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.