Correlation Between Humana and ULTRA CLEAN

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

By analyzing existing cross correlation between Humana Inc and ULTRA CLEAN HLDGS, you can compare the effects of market volatilities on Humana and ULTRA CLEAN 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 ULTRA CLEAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and ULTRA CLEAN.

Diversification Opportunities for Humana and ULTRA CLEAN

-0.37

Correlation Coefficient

Humana  ULTRA CLEAN

Very good diversification

The 3 months correlation between Humana and ULTRA is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and ULTRA CLEAN HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ULTRA CLEAN HLDGS 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 ULTRA CLEAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ULTRA CLEAN HLDGS has no effect on the direction of Humana i.e., Humana and ULTRA CLEAN go up and down completely randomly.

Pair Corralation between Humana and ULTRA CLEAN

Assuming the 90 days horizon Humana Inc is expected to generate 1.35 times more return on investment than ULTRA CLEAN. However, Humana is 1.35 times more volatile than ULTRA CLEAN HLDGS. It trades about 0.2 of its potential returns per unit of risk. ULTRA CLEAN HLDGS is currently generating about 0.26 per unit of risk. If you would invest  23,690  in Humana Inc on September 5, 2024 and sell it today you would earn a total of  4,100  from holding Humana Inc or generate 17.31% return on investment over 90 days.

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

Humana Inc  vs.  ULTRA CLEAN HLDGS

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 latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ULTRA CLEAN HLDGS

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Humana and ULTRA CLEAN

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

The idea behind Humana Inc and ULTRA CLEAN HLDGS 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.