Correlation Between Universal Health and Concord Medical
Can any of the company-specific risk be diversified away by investing in both Universal Health and Concord Medical 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 Universal Health and Concord Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Health Services and Concord Medical Services, you can compare the effects of market volatilities on Universal Health and Concord Medical 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 Universal Health with a short position of Concord Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Concord Medical.
Diversification Opportunities for Universal Health and Concord Medical
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Universal and Concord is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and Concord Medical Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concord Medical Services and Universal Health 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 Universal Health Services are associated (or correlated) with Concord Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concord Medical Services has no effect on the direction of Universal Health i.e., Universal Health and Concord Medical go up and down completely randomly.
Pair Corralation between Universal Health and Concord Medical
Considering the 90-day investment horizon Universal Health Services is expected to generate 0.19 times more return on investment than Concord Medical. However, Universal Health Services is 5.31 times less risky than Concord Medical. It trades about -0.08 of its potential returns per unit of risk. Concord Medical Services is currently generating about -0.21 per unit of risk. If you would invest 20,455 in Universal Health Services on August 28, 2024 and sell it today you would lose (534.00) from holding Universal Health Services or give up 2.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Universal Health Services vs. Concord Medical Services
Performance |
| Timeline |
| Universal Health Services |
| Concord Medical Services |
Universal Health and Concord Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and Concord Medical
The main advantage of trading using opposite Universal Health and Concord Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, Concord Medical 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 Concord Medical will offset losses from the drop in Concord Medical's long position.| Universal Health vs. The Ensign Group | Universal Health vs. Addus HomeCare | Universal Health vs. Encompass Health Corp | Universal Health vs. Surgery Partners |
| Concord Medical vs. Pennant Group | Concord Medical vs. Encompass Health Corp | Concord Medical vs. Enhabit | Concord Medical vs. National HealthCare |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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