Correlation Between UnitedHealth Group and Plurilock Security

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

Diversification Opportunities for UnitedHealth Group and Plurilock Security

0.22

Correlation Coefficient

UnitedHealth Group  Plurilock Security

Modest diversification

The 3 months correlation between UnitedHealth and Plurilock is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group CDR and Plurilock Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plurilock Security 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 Plurilock Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plurilock Security has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Plurilock Security go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Plurilock Security

Assuming the 90 days trading horizon UnitedHealth Group CDR is expected to under-perform the Plurilock Security. But the stock apears to be less risky and, when comparing its historical volatility, UnitedHealth Group CDR is 2.13 times less risky than Plurilock Security. The stock trades about -0.3 of its potential returns per unit of risk. The Plurilock Security is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Plurilock Security on September 30, 2024 and sell it today you would earn a total of  4.00  from holding Plurilock Security or generate 10.0% return on investment over 90 days.

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

UnitedHealth Group CDR  vs.  Plurilock Security

UnitedHealth Group CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UnitedHealth Group CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Plurilock Security

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plurilock Security has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with UnitedHealth Group and Plurilock Security

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

The idea behind UnitedHealth Group CDR and Plurilock Security 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.