Correlation Between Protalix Biotherapeutics and HUMANA

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

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

Diversification Opportunities for Protalix Biotherapeutics and HUMANA

0.28

Correlation Coefficient

Protalix Biotherapeutics  HUMANA

Modest diversification

The 3 months correlation between Protalix and HUMANA is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Protalix Biotherapeutics and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and Protalix Biotherapeutics 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 Protalix Biotherapeutics are associated (or correlated) with HUMANA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUMANA INC has no effect on the direction of Protalix Biotherapeutics i.e., Protalix Biotherapeutics and HUMANA go up and down completely randomly.

Pair Corralation between Protalix Biotherapeutics and HUMANA

Considering the 90-day investment horizon Protalix Biotherapeutics is expected to under-perform the HUMANA. In addition to that, Protalix Biotherapeutics is 1.55 times more volatile than HUMANA INC. It trades about -0.01 of its total potential returns per unit of risk. HUMANA INC is currently generating about 0.05 per unit of volatility. If you would invest  7,972  in HUMANA INC on January 25, 2024 and sell it today you would earn a total of  124.00  from holding HUMANA INC or generate 1.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Protalix Biotherapeutics  vs.  HUMANA INC

Protalix Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Protalix Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

HUMANA INC

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Protalix Biotherapeutics and HUMANA

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

The idea behind Protalix Biotherapeutics and HUMANA INC 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.