Correlation Between Superior Plus and Universal Health
Can any of the company-specific risk be diversified away by investing in both Superior Plus and Universal Health 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 Superior Plus and Universal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Universal Health Services, you can compare the effects of market volatilities on Superior Plus and Universal Health 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 Superior Plus with a short position of Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Universal Health.
Diversification Opportunities for Superior Plus and Universal Health
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Superior and Universal is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Services has no effect on the direction of Superior Plus i.e., Superior Plus and Universal Health go up and down completely randomly.
Pair Corralation between Superior Plus and Universal Health
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Universal Health. In addition to that, Superior Plus is 1.13 times more volatile than Universal Health Services. It trades about -0.02 of its total potential returns per unit of risk. Universal Health Services is currently generating about 0.05 per unit of volatility. If you would invest 13,398 in Universal Health Services on September 12, 2024 and sell it today you would earn a total of 4,802 from holding Universal Health Services or generate 35.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Universal Health Services
Performance |
| Timeline |
| Superior Plus Corp |
| Universal Health Services |
Superior Plus and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Universal Health
The main advantage of trading using opposite Superior Plus and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, Universal Health 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 Universal Health will offset losses from the drop in Universal Health's long position.| Superior Plus vs. AIR PRODCHEMICALS | Superior Plus vs. Suntory Beverage Food | Superior Plus vs. Molson Coors Beverage | Superior Plus vs. Monster Beverage Corp |
| Universal Health vs. The Hanover Insurance | Universal Health vs. BANKINTER ADR 2007 | Universal Health vs. Corporate Office Properties | Universal Health vs. Infrastrutture Wireless Italiane |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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