Correlation Between HUMANA and Fosun International

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Can any of the company-specific risk be diversified away by investing in both HUMANA and Fosun International 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 Fosun International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HUMANA INC and Fosun International, you can compare the effects of market volatilities on HUMANA and Fosun International 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 Fosun International. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Fosun International.

Diversification Opportunities for HUMANA and Fosun International

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between HUMANA and Fosun is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Fosun International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fosun International 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 Fosun International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fosun International has no effect on the direction of HUMANA i.e., HUMANA and Fosun International go up and down completely randomly.

Pair Corralation between HUMANA and Fosun International

Assuming the 90 days trading horizon HUMANA INC is expected to generate 0.31 times more return on investment than Fosun International. However, HUMANA INC is 3.26 times less risky than Fosun International. It trades about -0.05 of its potential returns per unit of risk. Fosun International is currently generating about -0.18 per unit of risk. If you would invest  8,090  in HUMANA INC on September 3, 2024 and sell it today you would lose (55.00) from holding HUMANA INC or give up 0.68% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy90.0%
ValuesDaily Returns

HUMANA INC  vs.  Fosun International

 Performance 
       Timeline  
HUMANA INC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
Fosun International 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Fosun International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fosun International reported solid returns over the last few months and may actually be approaching a breakup point.

HUMANA and Fosun International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HUMANA and Fosun International

The main advantage of trading using opposite HUMANA and Fosun International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, Fosun International 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 Fosun International will offset losses from the drop in Fosun International's long position.
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The idea behind HUMANA INC and Fosun International 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.
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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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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