Correlation Between Ambea AB and Humana AB

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

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

Diversification Opportunities for Ambea AB and Humana AB

0.53

Correlation Coefficient

Ambea AB  Humana AB

Very weak diversification

The 3 months correlation between Ambea and Humana is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ambea AB and Humana AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana AB and Ambea AB 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 Ambea AB are associated (or correlated) with Humana AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humana AB has no effect on the direction of Ambea AB i.e., Ambea AB and Humana AB go up and down completely randomly.

Pair Corralation between Ambea AB and Humana AB

Assuming the 90 days trading horizon Ambea AB is expected to generate 1.6 times less return on investment than Humana AB. But when comparing it to its historical volatility, Ambea AB is 1.25 times less risky than Humana AB. It trades about 0.09 of its potential returns per unit of risk. Humana AB is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,180  in Humana AB on September 14, 2024 and sell it today you would earn a total of  460.00  from holding Humana AB or generate 14.47% return on investment over 90 days.

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

Ambea AB  vs.  Humana AB

Ambea AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ambea AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ambea AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Humana AB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Humana AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Humana AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ambea AB and Humana AB

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

The idea behind Ambea AB and Humana AB 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.