Correlation Between Chemed and Universal Health

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

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

Diversification Opportunities for Chemed and Universal Health

0.52

Correlation Coefficient

Chemed  Universal Health

Very weak diversification

The 3 months correlation between Chemed and Universal is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Chemed 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 Chemed 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 Chemed 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 Chemed i.e., Chemed and Universal Health go up and down completely randomly.

Pair Corralation between Chemed and Universal Health

Assuming the 90 days horizon Chemed is expected to under-perform the Universal Health. But the stock apears to be less risky and, when comparing its historical volatility, Chemed is 1.09 times less risky than Universal Health. The stock trades about -0.2 of its potential returns per unit of risk. The Universal Health Services is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  14,585  in Universal Health Services on April 24, 2025 and sell it today you would lose (685.00) from holding Universal Health Services or give up 4.7% of portfolio value over 90 days.

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

Chemed  vs.  Universal Health Services

Chemed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chemed has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Universal Health Services

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Chemed and Universal Health

The main advantage of trading using opposite Chemed and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemed 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 Chemed 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.