Correlation Between Universal Health and FRESENIUS SECO

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

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

Diversification Opportunities for Universal Health and FRESENIUS SECO

0.34

Correlation Coefficient

Universal Health  FRESENIUS SECO

Weak diversification

The 3 months correlation between Universal and FRESENIUS is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and FRESENIUS SECO ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FRESENIUS SECO ADR and Universal Health 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 Universal Health Services are associated (or correlated) with FRESENIUS SECO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FRESENIUS SECO ADR has no effect on the direction of Universal Health i.e., Universal Health and FRESENIUS SECO go up and down completely randomly.

Pair Corralation between Universal Health and FRESENIUS SECO

Assuming the 90 days horizon Universal Health is expected to generate 15.17 times less return on investment than FRESENIUS SECO. In addition to that, Universal Health is 1.56 times more volatile than FRESENIUS SECO ADR. It trades about 0.0 of its total potential returns per unit of risk. FRESENIUS SECO ADR is currently generating about 0.07 per unit of volatility. If you would invest  947.00  in FRESENIUS SECO ADR on April 24, 2025 and sell it today you would earn a total of  53.00  from holding FRESENIUS SECO ADR or generate 5.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Universal Health Services  vs.  FRESENIUS SECO ADR

Universal Health Services

Risk-Adjusted Performance

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

FRESENIUS SECO ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FRESENIUS SECO ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, FRESENIUS SECO is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Universal Health and FRESENIUS SECO

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

The idea behind Universal Health Services and FRESENIUS SECO ADR 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.