Correlation Between HUMANA and Blue Star

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

By analyzing existing cross correlation between HUMANA INC and Blue Star Gold, you can compare the effects of market volatilities on HUMANA and Blue Star 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 Blue Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Blue Star.

Diversification Opportunities for HUMANA and Blue Star

0.52

Correlation Coefficient

HUMANA  Blue Star

Very weak diversification

The 3 months correlation between HUMANA and Blue is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Blue Star Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Star Gold 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 Blue Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Star Gold has no effect on the direction of HUMANA i.e., HUMANA and Blue Star go up and down completely randomly.

Pair Corralation between HUMANA and Blue Star

Assuming the 90 days trading horizon HUMANA INC is expected to generate 0.13 times more return on investment than Blue Star. However, HUMANA INC is 7.9 times less risky than Blue Star. It trades about -0.19 of its potential returns per unit of risk. Blue Star Gold is currently generating about -0.18 per unit of risk. If you would invest  8,466  in HUMANA INC on September 14, 2024 and sell it today you would lose (771.00) from holding HUMANA INC or give up 9.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

HUMANA INC  vs.  Blue Star Gold

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 inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HUMANA INC investors.

Blue Star Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Star Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with HUMANA and Blue Star

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

The idea behind HUMANA INC and Blue Star Gold 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.