Correlation Between Xiaomi and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Xiaomi and UnitedHealth Group 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 Xiaomi and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xiaomi and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Xiaomi and UnitedHealth Group 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 Xiaomi with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiaomi and UnitedHealth Group.
Diversification Opportunities for Xiaomi and UnitedHealth Group
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Xiaomi and UnitedHealth is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Xiaomi and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and Xiaomi 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 Xiaomi are associated (or correlated) with UnitedHealth Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UnitedHealth Group has no effect on the direction of Xiaomi i.e., Xiaomi and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Xiaomi and UnitedHealth Group
Assuming the 90 days trading horizon Xiaomi is expected to generate 1.89 times more return on investment than UnitedHealth Group. However, Xiaomi is 1.89 times more volatile than UnitedHealth Group Incorporated. It trades about 0.12 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.07 per unit of risk. If you would invest 3,100 in Xiaomi on September 4, 2024 and sell it today you would earn a total of 4,600 from holding Xiaomi or generate 148.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xiaomi vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| Xiaomi |
| UnitedHealth Group |
Xiaomi and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xiaomi and UnitedHealth Group
The main advantage of trading using opposite Xiaomi and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xiaomi position performs unexpectedly, UnitedHealth Group 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 UnitedHealth Group will offset losses from the drop in UnitedHealth Group's long position.| Xiaomi vs. Deutsche Bank Aktiengesellschaft | Xiaomi vs. Lloyds Banking Group | Xiaomi vs. Prudential Financial | Xiaomi vs. DXC Technology |
| UnitedHealth Group vs. McEwen Mining | UnitedHealth Group vs. Grupo Carso SAB | UnitedHealth Group vs. Samsung Electronics Co | UnitedHealth Group vs. Micron Technology |
Check out your portfolio center.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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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