Correlation Between Humana AB and Alimak Hek
Can any of the company-specific risk be diversified away by investing in both Humana AB and Alimak Hek 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 AB and Alimak Hek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana AB and Alimak Hek Group, you can compare the effects of market volatilities on Humana AB and Alimak Hek 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 AB with a short position of Alimak Hek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana AB and Alimak Hek.
Diversification Opportunities for Humana AB and Alimak Hek
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Humana and Alimak is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Humana AB and Alimak Hek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alimak Hek Group and Humana AB 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 AB are associated (or correlated) with Alimak Hek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alimak Hek Group has no effect on the direction of Humana AB i.e., Humana AB and Alimak Hek go up and down completely randomly.
Pair Corralation between Humana AB and Alimak Hek
Assuming the 90 days trading horizon Humana AB is expected to generate 1.67 times less return on investment than Alimak Hek. In addition to that, Humana AB is 1.32 times more volatile than Alimak Hek Group. It trades about 0.03 of its total potential returns per unit of risk. Alimak Hek Group is currently generating about 0.07 per unit of volatility. If you would invest 11,340 in Alimak Hek Group on August 29, 2024 and sell it today you would earn a total of 500.00 from holding Alimak Hek Group or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humana AB vs. Alimak Hek Group
Performance |
| Timeline |
| Humana AB |
| Alimak Hek Group |
Humana AB and Alimak Hek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana AB and Alimak Hek
The main advantage of trading using opposite Humana AB and Alimak Hek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana AB position performs unexpectedly, Alimak Hek 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 Alimak Hek will offset losses from the drop in Alimak Hek's long position.The idea behind Humana AB and Alimak Hek Group 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.| Alimak Hek vs. Inwido AB | Alimak Hek vs. Bufab Holding AB | Alimak Hek vs. Cloetta AB | Alimak Hek vs. Dometic Group AB |
Check out your portfolio center.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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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