Correlation Between Ihuman and MCKESSON

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

By analyzing existing cross correlation between Ihuman Inc and MCKESSON P NEW, you can compare the effects of market volatilities on Ihuman and MCKESSON 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 MCKESSON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ihuman and MCKESSON.

Diversification Opportunities for Ihuman and MCKESSON

0.26

Correlation Coefficient

Ihuman  MCKESSON

Modest diversification

The 3 months correlation between Ihuman and MCKESSON is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ihuman Inc and MCKESSON P NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCKESSON P NEW 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 MCKESSON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCKESSON P NEW has no effect on the direction of Ihuman i.e., Ihuman and MCKESSON go up and down completely randomly.

Pair Corralation between Ihuman and MCKESSON

Allowing for the 90-day total investment horizon Ihuman Inc is expected to under-perform the MCKESSON. In addition to that, Ihuman is 3.01 times more volatile than MCKESSON P NEW. It trades about -0.06 of its total potential returns per unit of risk. MCKESSON P NEW is currently generating about -0.06 per unit of volatility. If you would invest  10,260  in MCKESSON P NEW on September 27, 2024 and sell it today you would lose (342.00) from holding MCKESSON P NEW or give up 3.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	80.95%
Values	Daily Returns

Ihuman Inc  vs.  MCKESSON P NEW

Ihuman Inc

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Ihuman Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

MCKESSON P NEW

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ihuman and MCKESSON

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

The idea behind Ihuman Inc and MCKESSON P NEW 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.