Correlation Between HUMANA and Usinas Siderurgicas

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

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

Diversification Opportunities for HUMANA and Usinas Siderurgicas

0.38

Correlation Coefficient

HUMANA  Usinas Siderurgicas

Weak diversification

The 3 months correlation between HUMANA and Usinas is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Usinas Siderurgicas de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usinas Siderurgicas 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 Usinas Siderurgicas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usinas Siderurgicas has no effect on the direction of HUMANA i.e., HUMANA and Usinas Siderurgicas go up and down completely randomly.

Pair Corralation between HUMANA and Usinas Siderurgicas

Assuming the 90 days trading horizon HUMANA is expected to generate 8.08 times less return on investment than Usinas Siderurgicas. But when comparing it to its historical volatility, HUMANA INC is 6.11 times less risky than Usinas Siderurgicas. It trades about 0.07 of its potential returns per unit of risk. Usinas Siderurgicas de is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  91.00  in Usinas Siderurgicas de on December 26, 2024 and sell it today you would earn a total of  17.00  from holding Usinas Siderurgicas de or generate 18.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

HUMANA INC  vs.  Usinas Siderurgicas de

HUMANA INC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 5 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Usinas Siderurgicas

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Usinas Siderurgicas de are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Usinas Siderurgicas showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUMANA and Usinas Siderurgicas

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

The idea behind HUMANA INC and Usinas Siderurgicas de 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..