Correlation Between HUMANA and Bion Environmental

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

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

Diversification Opportunities for HUMANA and Bion Environmental

0.31

Correlation Coefficient

HUMANA  Bion Environmental

Weak diversification

The 3 months correlation between HUMANA and Bion is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Bion Environmental Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bion Environmental 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 Bion Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bion Environmental has no effect on the direction of HUMANA i.e., HUMANA and Bion Environmental go up and down completely randomly.

Pair Corralation between HUMANA and Bion Environmental

Assuming the 90 days trading horizon HUMANA INC is expected to generate 0.12 times more return on investment than Bion Environmental. However, HUMANA INC is 8.53 times less risky than Bion Environmental. It trades about -0.26 of its potential returns per unit of risk. Bion Environmental Technologies is currently generating about -0.09 per unit of risk. If you would invest  8,195  in HUMANA INC on September 30, 2024 and sell it today you would lose (500.00) from holding HUMANA INC or give up 6.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

HUMANA INC  vs.  Bion Environmental Technologie

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 weak 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.

Bion Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with HUMANA and Bion Environmental

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

The idea behind HUMANA INC and Bion Environmental Technologies 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.