Correlation Between Summit Materials and UNIDOC HEALTH

Can any of the company-specific risk be diversified away by investing in both Summit Materials and UNIDOC 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 Summit Materials and UNIDOC HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Summit Materials and UNIDOC HEALTH P, you can compare the effects of market volatilities on Summit Materials and UNIDOC 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 Summit Materials with a short position of UNIDOC HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and UNIDOC HEALTH.

Diversification Opportunities for Summit Materials and UNIDOC HEALTH

-0.79

Correlation Coefficient

Summit Materials  UNIDOC HEALTH

Pay attention - limited upside

The 3 months correlation between Summit and UNIDOC is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and UNIDOC HEALTH P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIDOC HEALTH P and Summit Materials 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 Summit Materials are associated (or correlated) with UNIDOC HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIDOC HEALTH P has no effect on the direction of Summit Materials i.e., Summit Materials and UNIDOC HEALTH go up and down completely randomly.

Pair Corralation between Summit Materials and UNIDOC HEALTH

Assuming the 90 days trading horizon Summit Materials is expected to generate 2.76 times less return on investment than UNIDOC HEALTH. But when comparing it to its historical volatility, Summit Materials is 3.82 times less risky than UNIDOC HEALTH. It trades about 0.06 of its potential returns per unit of risk. UNIDOC HEALTH P is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  25.00  in UNIDOC HEALTH P on October 11, 2024 and sell it today you would earn a total of  10.00  from holding UNIDOC HEALTH P or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Summit Materials  vs.  UNIDOC HEALTH P

Summit Materials

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Summit Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

UNIDOC HEALTH P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNIDOC HEALTH P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, UNIDOC HEALTH is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Summit Materials and UNIDOC HEALTH

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

The idea behind Summit Materials and UNIDOC HEALTH P 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.