Correlation Between Humana and EDAP TMS
Can any of the company-specific risk be diversified away by investing in both Humana and EDAP TMS 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 EDAP TMS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and EDAP TMS SA, you can compare the effects of market volatilities on Humana and EDAP TMS 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 EDAP TMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and EDAP TMS.
Diversification Opportunities for Humana and EDAP TMS
Excellent diversification
The 3 months correlation between Humana and EDAP is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and EDAP TMS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDAP TMS SA 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 EDAP TMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDAP TMS SA has no effect on the direction of Humana i.e., Humana and EDAP TMS go up and down completely randomly.
Pair Corralation between Humana and EDAP TMS
Considering the 90-day investment horizon Humana Inc is expected to generate 0.68 times more return on investment than EDAP TMS. However, Humana Inc is 1.46 times less risky than EDAP TMS. It trades about 0.01 of its potential returns per unit of risk. EDAP TMS SA is currently generating about -0.02 per unit of risk. If you would invest 34,943 in Humana Inc on February 29, 2024 and sell it today you would lose (22.00) from holding Humana Inc or give up 0.06% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Humana Inc vs. EDAP TMS SA
Performance |
Timeline |
Humana Inc |
EDAP TMS SA |
Humana and EDAP TMS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Humana and EDAP TMS
The main advantage of trading using opposite Humana and EDAP TMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, EDAP TMS 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 EDAP TMS will offset losses from the drop in EDAP TMS's long position.Humana vs. Elevance Health | Humana vs. Centene Corp | Humana vs. UnitedHealth Group Incorporated | Humana vs. CVS Health Corp |
EDAP TMS vs. Patterson Companies | EDAP TMS vs. Henry Schein | EDAP TMS vs. McKesson | EDAP TMS vs. Cardinal Health |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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