Correlation Between RCM TECHNOLOGIES and Universal Health

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

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

Diversification Opportunities for RCM TECHNOLOGIES and Universal Health

-0.64

Correlation Coefficient

RCM TECHNOLOGIES  Universal Health

Excellent diversification

The 3 months correlation between RCM and Universal is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding RCM TECHNOLOGIES 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 RCM TECHNOLOGIES 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 RCM TECHNOLOGIES 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 RCM TECHNOLOGIES i.e., RCM TECHNOLOGIES and Universal Health go up and down completely randomly.

Pair Corralation between RCM TECHNOLOGIES and Universal Health

Assuming the 90 days trading horizon RCM TECHNOLOGIES is expected to generate 2.06 times more return on investment than Universal Health. However, RCM TECHNOLOGIES is 2.06 times more volatile than Universal Health Services. It trades about -0.07 of its potential returns per unit of risk. Universal Health Services is currently generating about -0.25 per unit of risk. If you would invest  2,300  in RCM TECHNOLOGIES on September 13, 2024 and sell it today you would lose (120.00) from holding RCM TECHNOLOGIES or give up 5.22% of portfolio value over 90 days.

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

RCM TECHNOLOGIES  vs.  Universal Health Services

RCM TECHNOLOGIES

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RCM TECHNOLOGIES are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, RCM TECHNOLOGIES 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. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with RCM TECHNOLOGIES and Universal Health

The main advantage of trading using opposite RCM TECHNOLOGIES and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCM TECHNOLOGIES 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 RCM TECHNOLOGIES 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.