Correlation Between HUMANA and Valeo SE

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

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

Diversification Opportunities for HUMANA and Valeo SE

0.35

Correlation Coefficient

HUMANA  Valeo SE

Weak diversification

The 3 months correlation between HUMANA and Valeo is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Valeo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeo SE 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 Valeo SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeo SE has no effect on the direction of HUMANA i.e., HUMANA and Valeo SE go up and down completely randomly.

Pair Corralation between HUMANA and Valeo SE

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Valeo SE. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 4.51 times less risky than Valeo SE. The bond trades about -0.2 of its potential returns per unit of risk. The Valeo SE is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  797.00  in Valeo SE on September 22, 2024 and sell it today you would earn a total of  106.00  from holding Valeo SE or generate 13.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

HUMANA INC  vs.  Valeo SE

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 uncertain 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.

Valeo SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with HUMANA and Valeo SE

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

The idea behind HUMANA INC and Valeo SE 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.