Correlation Between HUMANA and Orezone Gold

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

Diversification Opportunities for HUMANA and Orezone Gold

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between HUMANA and Orezone is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Orezone Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orezone Gold Corp 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 Orezone Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orezone Gold Corp has no effect on the direction of HUMANA i.e., HUMANA and Orezone Gold go up and down completely randomly.

Pair Corralation between HUMANA and Orezone Gold

Assuming the 90 days trading horizon HUMANA INC is expected to generate 0.14 times more return on investment than Orezone Gold. However, HUMANA INC is 6.92 times less risky than Orezone Gold. It trades about 0.01 of its potential returns per unit of risk. Orezone Gold Corp is currently generating about 0.0 per unit of risk. If you would invest  7,941  in HUMANA INC on September 3, 2024 and sell it today you would earn a total of  94.00  from holding HUMANA INC or generate 1.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy97.17%
ValuesDaily Returns

HUMANA INC  vs.  Orezone Gold Corp

 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.
Orezone Gold Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Orezone Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Orezone Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HUMANA and Orezone Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HUMANA and Orezone Gold

The main advantage of trading using opposite HUMANA and Orezone Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, Orezone Gold 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 Orezone Gold will offset losses from the drop in Orezone Gold's long position.
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The idea behind HUMANA INC and Orezone Gold Corp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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