Correlation Between Humana AB and Lagercrantz Group
Can any of the company-specific risk be diversified away by investing in both Humana AB and Lagercrantz Group 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 Lagercrantz Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana AB and Lagercrantz Group AB, you can compare the effects of market volatilities on Humana AB and Lagercrantz Group 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 Lagercrantz Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana AB and Lagercrantz Group.
Diversification Opportunities for Humana AB and Lagercrantz Group
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Humana and Lagercrantz is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Humana AB and Lagercrantz Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lagercrantz 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 Lagercrantz Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lagercrantz Group has no effect on the direction of Humana AB i.e., Humana AB and Lagercrantz Group go up and down completely randomly.
Pair Corralation between Humana AB and Lagercrantz Group
Assuming the 90 days trading horizon Humana AB is expected to generate 1.74 times more return on investment than Lagercrantz Group. However, Humana AB is 1.74 times more volatile than Lagercrantz Group AB. It trades about -0.11 of its potential returns per unit of risk. Lagercrantz Group AB is currently generating about -0.24 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. Lagercrantz Group AB
Performance |
| Timeline |
| Humana AB |
| Lagercrantz Group |
Humana AB and Lagercrantz Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana AB and Lagercrantz Group
The main advantage of trading using opposite Humana AB and Lagercrantz Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana AB position performs unexpectedly, Lagercrantz Group 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 Lagercrantz Group will offset losses from the drop in Lagercrantz Group's long position.The idea behind Humana AB and Lagercrantz Group 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.| Lagercrantz Group vs. Addtech AB | Lagercrantz Group vs. Lifco AB | Lagercrantz Group vs. Indutrade AB | Lagercrantz Group vs. Vitec Software Group |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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