Correlation Between Humacyte and CareMax
Can any of the company-specific risk be diversified away by investing in both Humacyte and CareMax 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 Humacyte and CareMax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humacyte and CareMax, you can compare the effects of market volatilities on Humacyte and CareMax 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 Humacyte with a short position of CareMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humacyte and CareMax.
Diversification Opportunities for Humacyte and CareMax
Pay attention - limited upside
The 3 months correlation between Humacyte and CareMax is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Humacyte and CareMax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareMax and Humacyte 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 Humacyte are associated (or correlated) with CareMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareMax has no effect on the direction of Humacyte i.e., Humacyte and CareMax go up and down completely randomly.
Pair Corralation between Humacyte and CareMax
Assuming the 90 days horizon Humacyte is expected to generate 28.32 times less return on investment than CareMax. But when comparing it to its historical volatility, Humacyte is 13.82 times less risky than CareMax. It trades about 0.07 of its potential returns per unit of risk. CareMax is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 27.00 in CareMax on September 3, 2024 and sell it today you would lose (26.04) from holding CareMax or give up 96.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 76.21% |
| Values | Daily Returns |
Humacyte vs. CareMax
Performance |
| Timeline |
| Humacyte |
| CareMax |
Humacyte and CareMax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humacyte and CareMax
The main advantage of trading using opposite Humacyte and CareMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humacyte position performs unexpectedly, CareMax 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 CareMax will offset losses from the drop in CareMax's long position.The idea behind Humacyte and CareMax 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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