Correlation Between XLMedia PLC and Universal Health

Can any of the company-specific risk be diversified away by investing in both XLMedia PLC and Universal Health 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 XLMedia PLC and Universal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between XLMedia PLC and Universal Health Services, you can compare the effects of market volatilities on XLMedia PLC and Universal Health 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 XLMedia PLC with a short position of Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of XLMedia PLC and Universal Health.

Diversification Opportunities for XLMedia PLC and Universal Health

0.1

Correlation Coefficient

XLMedia PLC  Universal Health

Average diversification

The 3 months correlation between XLMedia and Universal is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services and XLMedia PLC 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 XLMedia PLC are associated (or correlated) with Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Services has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and Universal Health go up and down completely randomly.

Pair Corralation between XLMedia PLC and Universal Health

Assuming the 90 days trading horizon XLMedia PLC is expected to generate 2.34 times more return on investment than Universal Health. However, XLMedia PLC is 2.34 times more volatile than Universal Health Services. It trades about 0.01 of its potential returns per unit of risk. Universal Health Services is currently generating about -0.11 per unit of risk. If you would invest  960.00  in XLMedia PLC on October 8, 2024 and sell it today you would lose (30.00) from holding XLMedia PLC or give up 3.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

XLMedia PLC  vs.  Universal Health Services

XLMedia PLC

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XLMedia PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, XLMedia PLC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Universal Health Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Health Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with XLMedia PLC and Universal Health

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

The idea behind XLMedia PLC and Universal Health Services 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.