Correlation Between Humasis and SK Holdings

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

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

Diversification Opportunities for Humasis and SK Holdings

-0.34

Correlation Coefficient

Humasis  SK Holdings

Very good diversification

The 3 months correlation between Humasis and 034730 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Humasis Co and SK Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Holdings and Humasis 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 Humasis Co are associated (or correlated) with SK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Holdings has no effect on the direction of Humasis i.e., Humasis and SK Holdings go up and down completely randomly.

Pair Corralation between Humasis and SK Holdings

Assuming the 90 days trading horizon Humasis Co is expected to generate 3.37 times more return on investment than SK Holdings. However, Humasis is 3.37 times more volatile than SK Holdings Co. It trades about 0.05 of its potential returns per unit of risk. SK Holdings Co is currently generating about -0.04 per unit of risk. If you would invest  167,000  in Humasis Co on September 17, 2024 and sell it today you would earn a total of  15,300  from holding Humasis Co or generate 9.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Humasis Co  vs.  SK Holdings Co

Humasis

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Humasis Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Humasis sustained solid returns over the last few months and may actually be approaching a breakup point.

SK Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SK Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SK Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Humasis and SK Holdings

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

The idea behind Humasis Co and SK Holdings Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.