Correlation Between UnitedHealth Group and Grupo Simec

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

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

Diversification Opportunities for UnitedHealth Group and Grupo Simec

0.5

Correlation Coefficient

UnitedHealth Group  Grupo Simec

Very weak diversification

The 3 months correlation between UnitedHealth and Grupo is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Grupo Simec SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Simec SAB and UnitedHealth Group 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 UnitedHealth Group Incorporated are associated (or correlated) with Grupo Simec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Simec SAB has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Grupo Simec go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Grupo Simec

Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to under-perform the Grupo Simec. In addition to that, UnitedHealth Group is 22.26 times more volatile than Grupo Simec SAB. It trades about -0.14 of its total potential returns per unit of risk. Grupo Simec SAB is currently generating about -0.14 per unit of volatility. If you would invest  18,500  in Grupo Simec SAB on October 10, 2024 and sell it today you would lose (54.00) from holding Grupo Simec SAB or give up 0.29% of portfolio value over 90 days.

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

UnitedHealth Group Incorporate  vs.  Grupo Simec SAB

UnitedHealth Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UnitedHealth Group Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of 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.

Grupo Simec SAB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with UnitedHealth Group and Grupo Simec

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

The idea behind UnitedHealth Group Incorporated and Grupo Simec SAB 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.