Correlation Between UnitedHealth Group and Autohome

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

Diversification Opportunities for UnitedHealth Group and Autohome

-0.21

Correlation Coefficient

UnitedHealth Group  Autohome

Very good diversification

The 3 months correlation between UnitedHealth and Autohome is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Autohome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome 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 Autohome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autohome has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Autohome go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Autohome

Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to generate 0.89 times more return on investment than Autohome. However, UnitedHealth Group Incorporated is 1.12 times less risky than Autohome. It trades about 0.05 of its potential returns per unit of risk. Autohome is currently generating about 0.04 per unit of risk. If you would invest  4,012  in UnitedHealth Group Incorporated on September 26, 2024 and sell it today you would earn a total of  492.00  from holding UnitedHealth Group Incorporated or generate 12.26% return on investment over 90 days.

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

UnitedHealth Group Incorporate  vs.  Autohome

UnitedHealth Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UnitedHealth Group Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, UnitedHealth Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Autohome

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autohome has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Autohome 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 Autohome

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

The idea behind UnitedHealth Group Incorporated and Autohome 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.