Correlation Between UnitedHealth Group and Asiabasemetals
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Asiabasemetals 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 Asiabasemetals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UnitedHealth Group CDR and Asiabasemetals, you can compare the effects of market volatilities on UnitedHealth Group and Asiabasemetals 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 Asiabasemetals. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Asiabasemetals.
Diversification Opportunities for UnitedHealth Group and Asiabasemetals
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UnitedHealth and Asiabasemetals is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group CDR and Asiabasemetals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiabasemetals 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 CDR are associated (or correlated) with Asiabasemetals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiabasemetals has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Asiabasemetals go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Asiabasemetals
Assuming the 90 days trading horizon UnitedHealth Group CDR is expected to under-perform the Asiabasemetals. But the stock apears to be less risky and, when comparing its historical volatility, UnitedHealth Group CDR is 4.62 times less risky than Asiabasemetals. The stock trades about -0.04 of its potential returns per unit of risk. The Asiabasemetals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8.50 in Asiabasemetals on October 26, 2024 and sell it today you would lose (0.50) from holding Asiabasemetals or give up 5.88% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
UnitedHealth Group CDR vs. Asiabasemetals
Performance |
Timeline |
UnitedHealth Group CDR |
Asiabasemetals |
UnitedHealth Group and Asiabasemetals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with UnitedHealth Group and Asiabasemetals
The main advantage of trading using opposite UnitedHealth Group and Asiabasemetals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Asiabasemetals 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 Asiabasemetals will offset losses from the drop in Asiabasemetals' long position.UnitedHealth Group vs. Constellation Software | UnitedHealth Group vs. Guru Organic Energy | UnitedHealth Group vs. Rocky Mountain Liquor | UnitedHealth Group vs. Leveljump Healthcare Corp |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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