Correlation Between East Africa and UNITEDHEALTH

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

By analyzing existing cross correlation between East Africa Metals and UNITEDHEALTH GROUP INC, you can compare the effects of market volatilities on East Africa and UNITEDHEALTH 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 East Africa with a short position of UNITEDHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Africa and UNITEDHEALTH.

Diversification Opportunities for East Africa and UNITEDHEALTH

0.73

Correlation Coefficient

East Africa  UNITEDHEALTH

Poor diversification

The 3 months correlation between East and UNITEDHEALTH is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding East Africa Metals and UNITEDHEALTH GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITEDHEALTH GROUP INC and East Africa 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 East Africa Metals are associated (or correlated) with UNITEDHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITEDHEALTH GROUP INC has no effect on the direction of East Africa i.e., East Africa and UNITEDHEALTH go up and down completely randomly.

Pair Corralation between East Africa and UNITEDHEALTH

Assuming the 90 days horizon East Africa Metals is expected to under-perform the UNITEDHEALTH. In addition to that, East Africa is 3.18 times more volatile than UNITEDHEALTH GROUP INC. It trades about -0.16 of its total potential returns per unit of risk. UNITEDHEALTH GROUP INC is currently generating about -0.21 per unit of volatility. If you would invest  7,060  in UNITEDHEALTH GROUP INC on September 19, 2024 and sell it today you would lose (751.00) from holding UNITEDHEALTH GROUP INC or give up 10.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

East Africa Metals  vs.  UNITEDHEALTH GROUP INC

East Africa Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days East Africa Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITEDHEALTH GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for UNITEDHEALTH GROUP INC investors.

Pair Trading with East Africa and UNITEDHEALTH

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

The idea behind East Africa Metals and UNITEDHEALTH GROUP INC 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.