Correlation Between Ihuman and Summit Materials

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

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

Diversification Opportunities for Ihuman and Summit Materials

-0.51

Correlation Coefficient

Ihuman  Summit Materials

Excellent diversification

The 3 months correlation between Ihuman and Summit is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ihuman Inc and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Ihuman 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 Ihuman Inc are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Ihuman i.e., Ihuman and Summit Materials go up and down completely randomly.

Pair Corralation between Ihuman and Summit Materials

Allowing for the 90-day total investment horizon Ihuman Inc is expected to generate 1.79 times more return on investment than Summit Materials. However, Ihuman is 1.79 times more volatile than Summit Materials. It trades about 0.21 of its potential returns per unit of risk. Summit Materials is currently generating about 0.17 per unit of risk. If you would invest  163.00  in Ihuman Inc on September 17, 2024 and sell it today you would earn a total of  18.00  from holding Ihuman Inc or generate 11.04% return on investment over 90 days.

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

Ihuman Inc  vs.  Summit Materials

Ihuman Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ihuman Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, Ihuman demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Summit Materials

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Summit Materials displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ihuman and Summit Materials

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

The idea behind Ihuman Inc and Summit Materials 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.