Correlation Between Humana and Psychemedics
Can any of the company-specific risk be diversified away by investing in both Humana and Psychemedics 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 and Psychemedics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and Psychemedics, you can compare the effects of market volatilities on Humana and Psychemedics 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 with a short position of Psychemedics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and Psychemedics.
Diversification Opportunities for Humana and Psychemedics
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Humana and Psychemedics is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Psychemedics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Psychemedics and Humana 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 Inc are associated (or correlated) with Psychemedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Psychemedics has no effect on the direction of Humana i.e., Humana and Psychemedics go up and down completely randomly.
Pair Corralation between Humana and Psychemedics
Considering the 90-day investment horizon Humana is expected to generate 14.38 times less return on investment than Psychemedics. But when comparing it to its historical volatility, Humana Inc is 4.54 times less risky than Psychemedics. It trades about 0.04 of its potential returns per unit of risk. Psychemedics is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 233.00 in Psychemedics on September 12, 2024 and sell it today you would earn a total of 38.00 from holding Psychemedics or generate 16.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humana Inc vs. Psychemedics
Performance |
| Timeline |
| Humana Inc |
| Psychemedics |
Humana and Psychemedics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana and Psychemedics
The main advantage of trading using opposite Humana and Psychemedics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, Psychemedics 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 Psychemedics will offset losses from the drop in Psychemedics' long position.| Humana vs. Elevance Health | Humana vs. Centene Corp | Humana vs. UnitedHealth Group Incorporated | Humana vs. CVS Health Corp |
| Psychemedics vs. Fonar | Psychemedics vs. Burning Rock Biotech | Psychemedics vs. Sera Prognostics | Psychemedics vs. DarioHealth Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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