Correlation Between HUMANA and Taiga Building

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

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

Diversification Opportunities for HUMANA and Taiga Building

0.34

Correlation Coefficient

HUMANA  Taiga Building

Weak diversification

The 3 months correlation between HUMANA and Taiga is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Taiga Building Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiga Building Products 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 Taiga Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiga Building Products has no effect on the direction of HUMANA i.e., HUMANA and Taiga Building go up and down completely randomly.

Pair Corralation between HUMANA and Taiga Building

Assuming the 90 days trading horizon HUMANA is expected to generate 1.2 times less return on investment than Taiga Building. But when comparing it to its historical volatility, HUMANA INC is 1.66 times less risky than Taiga Building. It trades about 0.05 of its potential returns per unit of risk. Taiga Building Products is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  260.00  in Taiga Building Products on December 30, 2024 and sell it today you would earn a total of  7.00  from holding Taiga Building Products or generate 2.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

HUMANA INC  vs.  Taiga Building Products

HUMANA INC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Taiga Building Products

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Taiga Building Products are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Taiga Building is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HUMANA and Taiga Building

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

The idea behind HUMANA INC and Taiga Building Products 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.