Correlation Between Universal Health and EVS Broadcast

Can any of the company-specific risk be diversified away by investing in both Universal Health and EVS Broadcast 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 EVS Broadcast 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 EVS Broadcast Equipment, you can compare the effects of market volatilities on Universal Health and EVS Broadcast 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 EVS Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and EVS Broadcast.

Diversification Opportunities for Universal Health and EVS Broadcast

0.02

Correlation Coefficient

Universal Health  EVS Broadcast

Significant diversification

The 3 months correlation between Universal and EVS is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and EVS Broadcast Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVS Broadcast Equipment 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 EVS Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVS Broadcast Equipment has no effect on the direction of Universal Health i.e., Universal Health and EVS Broadcast go up and down completely randomly.

Pair Corralation between Universal Health and EVS Broadcast

Assuming the 90 days trading horizon Universal Health is expected to generate 1.09 times less return on investment than EVS Broadcast. In addition to that, Universal Health is 1.25 times more volatile than EVS Broadcast Equipment. It trades about 0.05 of its total potential returns per unit of risk. EVS Broadcast Equipment is currently generating about 0.06 per unit of volatility. If you would invest  2,019  in EVS Broadcast Equipment on September 13, 2024 and sell it today you would earn a total of  1,046  from holding EVS Broadcast Equipment or generate 51.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	87.09%
Values	Daily Returns

Universal Health Services  vs.  EVS Broadcast Equipment

Universal Health Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Health Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

EVS Broadcast Equipment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EVS Broadcast Equipment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, EVS Broadcast is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Universal Health and EVS Broadcast

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

The idea behind Universal Health Services and EVS Broadcast Equipment 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.