Correlation Between United Therapeutics and Superior Plus

Can any of the company-specific risk be diversified away by investing in both United Therapeutics and Superior Plus 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 United Therapeutics and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United Therapeutics and Superior Plus Corp, you can compare the effects of market volatilities on United Therapeutics and Superior Plus 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 United Therapeutics with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Therapeutics and Superior Plus.

Diversification Opportunities for United Therapeutics and Superior Plus

-0.32

Correlation Coefficient

United Therapeutics  Superior Plus

Very good diversification

The 3 months correlation between United and Superior is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding United Therapeutics and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and United Therapeutics 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 United Therapeutics are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of United Therapeutics i.e., United Therapeutics and Superior Plus go up and down completely randomly.

Pair Corralation between United Therapeutics and Superior Plus

Assuming the 90 days horizon United Therapeutics is expected to generate 0.67 times more return on investment than Superior Plus. However, United Therapeutics is 1.49 times less risky than Superior Plus. It trades about 0.08 of its potential returns per unit of risk. Superior Plus Corp is currently generating about 0.03 per unit of risk. If you would invest  34,690  in United Therapeutics on October 26, 2024 and sell it today you would earn a total of  620.00  from holding United Therapeutics or generate 1.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

United Therapeutics  vs.  Superior Plus Corp

United Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Therapeutics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Superior Plus is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with United Therapeutics and Superior Plus

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

The idea behind United Therapeutics and Superior Plus Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.