Correlation Between KLA Tencor and UNITEDHEALTH

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

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

Diversification Opportunities for KLA Tencor and UNITEDHEALTH

0.03

Correlation Coefficient

KLA Tencor  UNITEDHEALTH

Significant diversification

The 3 months correlation between KLA and UNITEDHEALTH is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor 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 KLA Tencor 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 KLA Tencor 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 KLA Tencor i.e., KLA Tencor and UNITEDHEALTH go up and down completely randomly.

Pair Corralation between KLA Tencor and UNITEDHEALTH

Given the investment horizon of 90 days KLA Tencor is expected to under-perform the UNITEDHEALTH. In addition to that, KLA Tencor is 7.43 times more volatile than UNITEDHEALTH GROUP INC. It trades about -0.11 of its total potential returns per unit of risk. UNITEDHEALTH GROUP INC is currently generating about -0.1 per unit of volatility. If you would invest  9,855  in UNITEDHEALTH GROUP INC on October 5, 2024 and sell it today you would lose (203.00) from holding UNITEDHEALTH GROUP INC or give up 2.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

KLA Tencor  vs.  UNITEDHEALTH GROUP INC

KLA Tencor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KLA Tencor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 somewhat strong basic indicators, UNITEDHEALTH is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KLA Tencor and UNITEDHEALTH

The main advantage of trading using opposite KLA Tencor and UNITEDHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor 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 KLA Tencor 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.