Correlation Between VIETNAM ENTERPRISE and Humana

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

By analyzing existing cross correlation between VIETNAM ENTERPRISE INV and Humana Inc, you can compare the effects of market volatilities on VIETNAM ENTERPRISE and Humana 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 VIETNAM ENTERPRISE with a short position of Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIETNAM ENTERPRISE and Humana.

Diversification Opportunities for VIETNAM ENTERPRISE and Humana

-0.34

Correlation Coefficient

VIETNAM ENTERPRISE  Humana

Very good diversification

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

Pair Corralation between VIETNAM ENTERPRISE and Humana

Assuming the 90 days horizon VIETNAM ENTERPRISE INV is expected to generate 0.27 times more return on investment than Humana. However, VIETNAM ENTERPRISE INV is 3.7 times less risky than Humana. It trades about 0.06 of its potential returns per unit of risk. Humana Inc is currently generating about -0.02 per unit of risk. If you would invest  665.00  in VIETNAM ENTERPRISE INV on September 15, 2024 and sell it today you would earn a total of  25.00  from holding VIETNAM ENTERPRISE INV or generate 3.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

VIETNAM ENTERPRISE INV  vs.  Humana Inc

VIETNAM ENTERPRISE INV

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VIETNAM ENTERPRISE INV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, VIETNAM ENTERPRISE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 nearly stable basic indicators, Humana is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with VIETNAM ENTERPRISE and Humana

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

The idea behind VIETNAM ENTERPRISE INV and Humana Inc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.