Correlation Between UnitedHealth Group and Zoomd Technologies

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

Diversification Opportunities for UnitedHealth Group and Zoomd Technologies

-0.62

Correlation Coefficient

UnitedHealth Group  Zoomd Technologies

Excellent diversification

The 3 months correlation between UnitedHealth and Zoomd is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group CDR and Zoomd Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoomd Technologies 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 Zoomd Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoomd Technologies has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Zoomd Technologies go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Zoomd Technologies

Assuming the 90 days trading horizon UnitedHealth Group is expected to generate 5.7 times less return on investment than Zoomd Technologies. But when comparing it to its historical volatility, UnitedHealth Group CDR is 2.81 times less risky than Zoomd Technologies. It trades about 0.02 of its potential returns per unit of risk. Zoomd Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  75.00  in Zoomd Technologies on October 13, 2024 and sell it today you would earn a total of  2.00  from holding Zoomd Technologies or generate 2.67% return on investment over 90 days.

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

UnitedHealth Group CDR  vs.  Zoomd Technologies

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 very healthy basic indicators, UnitedHealth Group is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Zoomd Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zoomd Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Zoomd Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UnitedHealth Group and Zoomd Technologies

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

The idea behind UnitedHealth Group CDR and Zoomd Technologies 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.