Correlation Between Quipt Home and UnitedHealth Group

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

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

Diversification Opportunities for Quipt Home and UnitedHealth Group

-0.15

Correlation Coefficient

Quipt Home  UnitedHealth Group

Good diversification

The 3 months correlation between Quipt and UnitedHealth is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Quipt Home Medical 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 Quipt Home 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 Quipt Home Medical 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 Quipt Home i.e., Quipt Home and UnitedHealth Group go up and down completely randomly.

Pair Corralation between Quipt Home and UnitedHealth Group

Assuming the 90 days trading horizon Quipt Home Medical is expected to generate 1.83 times more return on investment than UnitedHealth Group. However, Quipt Home is 1.83 times more volatile than UnitedHealth Group CDR. It trades about 0.04 of its potential returns per unit of risk. UnitedHealth Group CDR is currently generating about -0.3 per unit of risk. If you would invest  347.00  in Quipt Home Medical on September 27, 2024 and sell it today you would earn a total of  6.00  from holding Quipt Home Medical or generate 1.73% return on investment over 90 days.

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

Quipt Home Medical  vs.  UnitedHealth Group CDR

Quipt Home Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quipt Home Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Quipt Home is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the 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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Quipt Home and UnitedHealth Group

The main advantage of trading using opposite Quipt Home and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quipt Home 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 Quipt Home Medical 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.