Correlation Between Herald Investment and Universal Health

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

By analyzing existing cross correlation between Herald Investment Trust and Universal Health Services, you can compare the effects of market volatilities on Herald Investment and Universal 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 Herald Investment with a short position of Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and Universal Health.

Diversification Opportunities for Herald Investment and Universal Health

-0.75

Correlation Coefficient

Herald Investment  Universal Health

Pay attention - limited upside

The 3 months correlation between Herald and Universal is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services and Herald Investment 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 Herald Investment Trust are associated (or correlated) with Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Services has no effect on the direction of Herald Investment i.e., Herald Investment and Universal Health go up and down completely randomly.

Pair Corralation between Herald Investment and Universal Health

Assuming the 90 days trading horizon Herald Investment Trust is expected to generate 0.69 times more return on investment than Universal Health. However, Herald Investment Trust is 1.45 times less risky than Universal Health. It trades about 0.78 of its potential returns per unit of risk. Universal Health Services is currently generating about -0.33 per unit of risk. If you would invest  216,000  in Herald Investment Trust on September 19, 2024 and sell it today you would earn a total of  33,000  from holding Herald Investment Trust or generate 15.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Herald Investment Trust  vs.  Universal Health Services

Herald Investment Trust

Risk-Adjusted Performance

24 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Herald Investment Trust are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Herald Investment exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Herald Investment and Universal Health

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

The idea behind Herald Investment Trust and Universal Health Services 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.