Correlation Between Universal Health and Blue Star

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

Diversification Opportunities for Universal Health and Blue Star

-0.16

Correlation Coefficient

Universal Health  Blue Star

Good diversification

The 3 months correlation between Universal and Blue is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and Blue Star Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Star Capital 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 Blue Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Star Capital has no effect on the direction of Universal Health i.e., Universal Health and Blue Star go up and down completely randomly.

Pair Corralation between Universal Health and Blue Star

Assuming the 90 days trading horizon Universal Health Services is expected to under-perform the Blue Star. But the stock apears to be less risky and, when comparing its historical volatility, Universal Health Services is 99.15 times less risky than Blue Star. The stock trades about -0.09 of its potential returns per unit of risk. The Blue Star Capital is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  250.00  in Blue Star Capital on October 26, 2024 and sell it today you would earn a total of  725.00  from holding Blue Star Capital or generate 290.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.55%
Values	Daily Returns

Universal Health Services  vs.  Blue Star Capital

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Blue Star Capital

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Star Capital are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Blue Star exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Universal Health and Blue Star

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

The idea behind Universal Health Services and Blue Star Capital 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.