Correlation Between HUMANA and BKES

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

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

Diversification Opportunities for HUMANA and BKES

-0.6

Correlation Coefficient

HUMANA  BKES

Excellent diversification

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

Pair Corralation between HUMANA and BKES

If you would invest  4,135  in BKES on September 4, 2024 and sell it today you would earn a total of  0.00  from holding BKES or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.64%
Values	Daily Returns

HUMANA INC  vs.  BKES

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 somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

BKES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BKES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, BKES is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with HUMANA and BKES

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

The idea behind HUMANA INC and BKES 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.