Correlation Between Universal Health and MAHLE Metal

Can any of the company-specific risk be diversified away by investing in both Universal Health and MAHLE Metal 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 MAHLE Metal 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 MAHLE Metal Leve, you can compare the effects of market volatilities on Universal Health and MAHLE Metal 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 MAHLE Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and MAHLE Metal.

Diversification Opportunities for Universal Health and MAHLE Metal

0.53

Correlation Coefficient

Universal Health  MAHLE Metal

Very weak diversification

The 3 months correlation between Universal and MAHLE is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services, and MAHLE Metal Leve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAHLE Metal Leve 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 MAHLE Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAHLE Metal Leve has no effect on the direction of Universal Health i.e., Universal Health and MAHLE Metal go up and down completely randomly.

Pair Corralation between Universal Health and MAHLE Metal

Assuming the 90 days trading horizon Universal Health Services, is expected to generate 0.16 times more return on investment than MAHLE Metal. However, Universal Health Services, is 6.39 times less risky than MAHLE Metal. It trades about 0.2 of its potential returns per unit of risk. MAHLE Metal Leve is currently generating about -0.19 per unit of risk. If you would invest  28,735  in Universal Health Services, on October 7, 2024 and sell it today you would earn a total of  658.00  from holding Universal Health Services, or generate 2.29% return on investment over 90 days.

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

Universal Health Services,  vs.  MAHLE Metal Leve

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 somewhat strong technical indicators, Universal Health is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

MAHLE Metal Leve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAHLE Metal Leve has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Universal Health and MAHLE Metal

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

The idea behind Universal Health Services, and MAHLE Metal Leve 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 Commodity Directory module to find actively traded commodities issued by global exchanges.