Correlation Between MODIVCARE INC and UNIPHAR PLC

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

By analyzing existing cross correlation between MODIVCARE INC DL 001 and UNIPHAR PLC EO, you can compare the effects of market volatilities on MODIVCARE INC and UNIPHAR PLC 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 MODIVCARE INC with a short position of UNIPHAR PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of MODIVCARE INC and UNIPHAR PLC.

Diversification Opportunities for MODIVCARE INC and UNIPHAR PLC

0.75

Correlation Coefficient

MODIVCARE INC  UNIPHAR PLC

Poor diversification

The 3 months correlation between MODIVCARE and UNIPHAR is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding MODIVCARE INC DL 001 and UNIPHAR PLC EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIPHAR PLC EO and MODIVCARE INC 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 MODIVCARE INC DL 001 are associated (or correlated) with UNIPHAR PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIPHAR PLC EO has no effect on the direction of MODIVCARE INC i.e., MODIVCARE INC and UNIPHAR PLC go up and down completely randomly.

Pair Corralation between MODIVCARE INC and UNIPHAR PLC

Assuming the 90 days trading horizon MODIVCARE INC DL 001 is expected to generate 7.43 times more return on investment than UNIPHAR PLC. However, MODIVCARE INC is 7.43 times more volatile than UNIPHAR PLC EO. It trades about 0.19 of its potential returns per unit of risk. UNIPHAR PLC EO is currently generating about 0.23 per unit of risk. If you would invest  62.00  in MODIVCARE INC DL 001 on April 22, 2025 and sell it today you would earn a total of  190.00  from holding MODIVCARE INC DL 001 or generate 306.45% return on investment over 90 days.

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

MODIVCARE INC DL 001  vs.  UNIPHAR PLC EO

MODIVCARE INC DL

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MODIVCARE INC DL 001 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, MODIVCARE INC reported solid returns over the last few months and may actually be approaching a breakup point.

UNIPHAR PLC EO

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UNIPHAR PLC EO are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, UNIPHAR PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MODIVCARE INC and UNIPHAR PLC

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

The idea behind MODIVCARE INC DL 001 and UNIPHAR PLC EO 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.