Correlation Between Humana AB and Cloetta AB
Can any of the company-specific risk be diversified away by investing in both Humana AB and Cloetta 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 Cloetta 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 Cloetta AB, you can compare the effects of market volatilities on Humana AB and Cloetta 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 Cloetta AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana AB and Cloetta AB.
Diversification Opportunities for Humana AB and Cloetta AB
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Humana and Cloetta is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Humana AB and Cloetta AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloetta 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 Cloetta AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloetta AB has no effect on the direction of Humana AB i.e., Humana AB and Cloetta AB go up and down completely randomly.
Pair Corralation between Humana AB and Cloetta AB
Assuming the 90 days trading horizon Humana AB is expected to generate 2.37 times more return on investment than Cloetta AB. However, Humana AB is 2.37 times more volatile than Cloetta AB. It trades about -0.11 of its potential returns per unit of risk. Cloetta AB is currently generating about -0.26 per unit of risk. If you would invest 3,865 in Humana AB on August 29, 2024 and sell it today you would lose (235.00) from holding Humana AB or give up 6.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humana AB vs. Cloetta AB
Performance |
| Timeline |
| Humana AB |
| Cloetta AB |
Humana AB and Cloetta AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana AB and Cloetta AB
The main advantage of trading using opposite Humana AB and Cloetta AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana AB position performs unexpectedly, Cloetta 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 Cloetta AB will offset losses from the drop in Cloetta AB's long position.The idea behind Humana AB and Cloetta 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.| Cloetta AB vs. Securitas AB | Cloetta AB vs. Clas Ohlson AB | Cloetta AB vs. Axfood AB | Cloetta AB vs. Byggmax 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| CEOs Directory Screen CEOs from public companies around the world |