Correlation Between Software Circle and Universal Health

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

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

Diversification Opportunities for Software Circle and Universal Health

0.34

Correlation Coefficient

Software Circle  Universal Health

Weak diversification

The 3 months correlation between Software and Universal is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Software Circle 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 Software Circle 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 Software Circle 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 Software Circle i.e., Software Circle and Universal Health go up and down completely randomly.

Pair Corralation between Software Circle and Universal Health

Assuming the 90 days trading horizon Software Circle plc is expected to under-perform the Universal Health. But the stock apears to be less risky and, when comparing its historical volatility, Software Circle plc is 1.33 times less risky than Universal Health. The stock trades about -0.04 of its potential returns per unit of risk. The Universal Health Services is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  17,000  in Universal Health Services on April 22, 2025 and sell it today you would lose (2.00) from holding Universal Health Services or give up 0.01% of portfolio value over 90 days.

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

Software Circle plc  vs.  Universal Health Services

Software Circle plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Software Circle plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Software Circle 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

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Health Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Universal Health may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Software Circle and Universal Health

The main advantage of trading using opposite Software Circle and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Software Circle 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 Software Circle 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.