Correlation Between Transportadora and HUMANA

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

By analyzing existing cross correlation between Transportadora de Gas and HUMANA INC 48, you can compare the effects of market volatilities on Transportadora and HUMANA 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 Transportadora with a short position of HUMANA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and HUMANA.

Diversification Opportunities for Transportadora and HUMANA

-0.6

Correlation Coefficient

Transportadora  HUMANA

Excellent diversification

The 3 months correlation between Transportadora and HUMANA is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and HUMANA INC 48 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC 48 and Transportadora 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 Transportadora de Gas are associated (or correlated) with HUMANA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUMANA INC 48 has no effect on the direction of Transportadora i.e., Transportadora and HUMANA go up and down completely randomly.

Pair Corralation between Transportadora and HUMANA

Considering the 90-day investment horizon Transportadora is expected to generate 15.19 times less return on investment than HUMANA. But when comparing it to its historical volatility, Transportadora de Gas is 20.02 times less risky than HUMANA. It trades about 0.08 of its potential returns per unit of risk. HUMANA INC 48 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  8,845  in HUMANA INC 48 on September 14, 2024 and sell it today you would lose (218.00) from holding HUMANA INC 48 or give up 2.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	53.18%
Values	Daily Returns

Transportadora de Gas  vs.  HUMANA INC 48

Transportadora de Gas

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Transportadora unveiled solid returns over the last few months and may actually be approaching a breakup point.

HUMANA INC 48

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUMANA INC 48 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for HUMANA INC 48 investors.

Pair Trading with Transportadora and HUMANA

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

The idea behind Transportadora de Gas and HUMANA INC 48 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.