Correlation Between HUMANA and Smartmetric

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

By analyzing existing cross correlation between HUMANA INC and Smartmetric, you can compare the effects of market volatilities on HUMANA and Smartmetric 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 Smartmetric. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Smartmetric.

Diversification Opportunities for HUMANA and Smartmetric

0.1

Correlation Coefficient

HUMANA  Smartmetric

Average diversification

The 3 months correlation between HUMANA and Smartmetric is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Smartmetric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smartmetric 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 Smartmetric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smartmetric has no effect on the direction of HUMANA i.e., HUMANA and Smartmetric go up and down completely randomly.

Pair Corralation between HUMANA and Smartmetric

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Smartmetric. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 38.83 times less risky than Smartmetric. The bond trades about -0.34 of its potential returns per unit of risk. The Smartmetric is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Smartmetric on July 30, 2024 and sell it today you would lose (0.01) from holding Smartmetric or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

HUMANA INC  vs.  Smartmetric

HUMANA INC

Risk-Adjusted Performance

0 of 100

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Smartmetric

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Smartmetric are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting primary indicators, Smartmetric exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUMANA and Smartmetric

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

The idea behind HUMANA INC and Smartmetric 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.