Correlation Between Lion One and UnitedHealth Group

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

By analyzing existing cross correlation between Lion One Metals and UnitedHealth Group CDR, you can compare the effects of market volatilities on Lion One and UnitedHealth Group 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 Lion One with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and UnitedHealth Group.

Diversification Opportunities for Lion One and UnitedHealth Group

0.39

Correlation Coefficient

Lion One  UnitedHealth Group

Weak diversification

The 3 months correlation between Lion and UnitedHealth is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and UnitedHealth Group CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group CDR and Lion One 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 Lion One Metals are associated (or correlated) with UnitedHealth Group. 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 CDR has no effect on the direction of Lion One i.e., Lion One and UnitedHealth Group go up and down completely randomly.

Pair Corralation between Lion One and UnitedHealth Group

Assuming the 90 days horizon Lion One Metals is expected to under-perform the UnitedHealth Group. In addition to that, Lion One is 2.09 times more volatile than UnitedHealth Group CDR. It trades about -0.02 of its total potential returns per unit of risk. UnitedHealth Group CDR is currently generating about -0.05 per unit of volatility. If you would invest  2,659  in UnitedHealth Group CDR on October 15, 2024 and sell it today you would lose (185.00) from holding UnitedHealth Group CDR or give up 6.96% of portfolio value over 90 days.

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

Lion One Metals  vs.  UnitedHealth Group CDR

Lion One Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

UnitedHealth Group CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UnitedHealth Group CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, UnitedHealth Group is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lion One and UnitedHealth Group

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

The idea behind Lion One Metals and UnitedHealth Group CDR 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.