Correlation Between Hansa Investment and Universal Health
Can any of the company-specific risk be diversified away by investing in both Hansa Investment 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 Hansa Investment and Universal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hansa Investment and Universal Health Services, you can compare the effects of market volatilities on Hansa Investment 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 Hansa Investment with a short position of Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansa Investment and Universal Health.
Diversification Opportunities for Hansa Investment and Universal Health
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hansa and Universal is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Hansa Investment 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 Hansa Investment 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 Hansa Investment 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 Hansa Investment i.e., Hansa Investment and Universal Health go up and down completely randomly.
Pair Corralation between Hansa Investment and Universal Health
Assuming the 90 days trading horizon Hansa Investment is expected to generate 1.91 times less return on investment than Universal Health. But when comparing it to its historical volatility, Hansa Investment is 1.26 times less risky than Universal Health. It trades about 0.04 of its potential returns per unit of risk. Universal Health Services is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 13,281 in Universal Health Services on September 3, 2024 and sell it today you would earn a total of 7,219 from holding Universal Health Services or generate 54.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.54% |
| Values | Daily Returns |
Hansa Investment vs. Universal Health Services
Performance |
| Timeline |
| Hansa Investment |
| Universal Health Services |
Hansa Investment and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hansa Investment and Universal Health
The main advantage of trading using opposite Hansa Investment and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansa Investment 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.| Hansa Investment vs. Hansa Biopharma AB | Hansa Investment vs. Hansa Trust | Hansa Investment vs. Eastman Chemical Co | Hansa Investment vs. American Tower REIT |
| Universal Health vs. AMG Advanced Metallurgical | Universal Health vs. Greenroc Mining PLC | Universal Health vs. Neometals | Universal Health vs. MT Bank Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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