Correlation Between Universal Health and JBS ON

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

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

Diversification Opportunities for Universal Health and JBS ON

-0.03

Correlation Coefficient

Universal Health  JBS ON

Good diversification

The 3 months correlation between Universal and JBS is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services, and JBS ON NM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS ON NM and Universal Health 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 Universal Health Services, are associated (or correlated) with JBS ON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS ON NM has no effect on the direction of Universal Health i.e., Universal Health and JBS ON go up and down completely randomly.

Pair Corralation between Universal Health and JBS ON

Assuming the 90 days trading horizon Universal Health Services, is expected to generate 0.84 times more return on investment than JBS ON. However, Universal Health Services, is 1.19 times less risky than JBS ON. It trades about -0.24 of its potential returns per unit of risk. JBS ON NM is currently generating about -0.31 per unit of risk. If you would invest  29,393  in Universal Health Services, on October 25, 2024 and sell it today you would lose (1,613) from holding Universal Health Services, or give up 5.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Universal Health Services,  vs.  JBS ON NM

Universal Health Ser

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 weak performance in the last few months, the Stock's technical indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

JBS ON NM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JBS ON NM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JBS ON is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Universal Health and JBS ON

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

The idea behind Universal Health Services, and JBS ON NM 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.