Correlation Between Humana AB and Ambea AB
Can any of the company-specific risk be diversified away by investing in both Humana AB and Ambea AB 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 Ambea AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana AB and Ambea AB, you can compare the effects of market volatilities on Humana AB and Ambea AB 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 Ambea AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana AB and Ambea AB.
Diversification Opportunities for Humana AB and Ambea AB
Significant diversification
The 3 months correlation between Humana and Ambea is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Humana AB and Ambea AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambea AB 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 Ambea AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambea AB has no effect on the direction of Humana AB i.e., Humana AB and Ambea AB go up and down completely randomly.
Pair Corralation between Humana AB and Ambea AB
Assuming the 90 days trading horizon Humana AB is expected to generate 0.78 times more return on investment than Ambea AB. However, Humana AB is 1.29 times less risky than Ambea AB. It trades about -0.05 of its potential returns per unit of risk. Ambea AB is currently generating about -0.06 per unit of risk. If you would invest 3,565 in Humana AB on October 25, 2024 and sell it today you would lose (65.00) from holding Humana AB or give up 1.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humana AB vs. Ambea AB
Performance |
| Timeline |
| Humana AB |
| Ambea AB |
Humana AB and Ambea AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana AB and Ambea AB
The main advantage of trading using opposite Humana AB and Ambea AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana AB position performs unexpectedly, Ambea AB 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 Ambea AB will offset losses from the drop in Ambea AB's long position.The idea behind Humana AB and Ambea AB 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.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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