Correlation Between Humanica Public and Comanche International

Can any of the company-specific risk be diversified away by investing in both Humanica Public and Comanche 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 Humanica Public and Comanche International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Humanica Public and Comanche International Public, you can compare the effects of market volatilities on Humanica Public and Comanche 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 Humanica Public with a short position of Comanche International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humanica Public and Comanche International.

Diversification Opportunities for Humanica Public and Comanche International

0.9

Correlation Coefficient

Humanica Public  Comanche International

Almost no diversification

The 3 months correlation between Humanica and Comanche is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Humanica Public and Comanche International Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comanche International and Humanica Public 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 Humanica Public are associated (or correlated) with Comanche International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comanche International has no effect on the direction of Humanica Public i.e., Humanica Public and Comanche International go up and down completely randomly.

Pair Corralation between Humanica Public and Comanche International

Assuming the 90 days trading horizon Humanica Public is expected to generate 0.36 times more return on investment than Comanche International. However, Humanica Public is 2.8 times less risky than Comanche International. It trades about -0.02 of its potential returns per unit of risk. Comanche International Public is currently generating about -0.08 per unit of risk. If you would invest  1,074  in Humanica Public on September 5, 2024 and sell it today you would lose (154.00) from holding Humanica Public or give up 14.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Humanica Public  vs.  Comanche International Public

Humanica Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Humanica Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Comanche International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Comanche International Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Humanica Public and Comanche International

The main advantage of trading using opposite Humanica Public and Comanche International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humanica Public position performs unexpectedly, Comanche 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 Comanche International will offset losses from the drop in Comanche International's long position.

The idea behind Humanica Public and Comanche International Public 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.