Correlation Between METISA Metalrgica and Universal Health

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

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

Diversification Opportunities for METISA Metalrgica and Universal Health

-0.85

Correlation Coefficient

METISA Metalrgica  Universal Health

Pay attention - limited upside

The 3 months correlation between METISA and Universal is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and Universal Health Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Ser and METISA Metalrgica 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 METISA Metalrgica Timboense 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 Ser has no effect on the direction of METISA Metalrgica i.e., METISA Metalrgica and Universal Health go up and down completely randomly.

Pair Corralation between METISA Metalrgica and Universal Health

Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to generate 1.22 times more return on investment than Universal Health. However, METISA Metalrgica is 1.22 times more volatile than Universal Health Services,. It trades about 0.16 of its potential returns per unit of risk. Universal Health Services, is currently generating about -0.14 per unit of risk. If you would invest  3,643  in METISA Metalrgica Timboense on December 26, 2024 and sell it today you would earn a total of  531.00  from holding METISA Metalrgica Timboense or generate 14.58% return on investment over 90 days.

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

METISA Metalrgica Timboense  vs.  Universal Health Services,

METISA Metalrgica

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in METISA Metalrgica Timboense are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, METISA Metalrgica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Universal Health Ser

Risk-Adjusted Performance

Very Weak

Over the last 90 days Universal Health Services, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with METISA Metalrgica and Universal Health

The main advantage of trading using opposite METISA Metalrgica and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METISA Metalrgica 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 METISA Metalrgica Timboense 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.