Correlation Between HUMANA and Snipp Interactive

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

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

Diversification Opportunities for HUMANA and Snipp Interactive

0.08

Correlation Coefficient

HUMANA  Snipp Interactive

Significant diversification

The 3 months correlation between HUMANA and Snipp is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Snipp Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snipp Interactive 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 Snipp Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snipp Interactive has no effect on the direction of HUMANA i.e., HUMANA and Snipp Interactive go up and down completely randomly.

Pair Corralation between HUMANA and Snipp Interactive

Assuming the 90 days trading horizon HUMANA INC is expected to generate 0.16 times more return on investment than Snipp Interactive. However, HUMANA INC is 6.06 times less risky than Snipp Interactive. It trades about -0.08 of its potential returns per unit of risk. Snipp Interactive is currently generating about -0.08 per unit of risk. If you would invest  8,257  in HUMANA INC on December 4, 2024 and sell it today you would lose (358.00) from holding HUMANA INC or give up 4.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

HUMANA INC  vs.  Snipp Interactive

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.

Snipp Interactive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Snipp Interactive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with HUMANA and Snipp Interactive

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

The idea behind HUMANA INC and Snipp Interactive 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.