Correlation Between Universal Health and CeoTronics

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

By analyzing existing cross correlation between Universal Health Realty and CeoTronics AG, you can compare the effects of market volatilities on Universal Health and CeoTronics 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 CeoTronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and CeoTronics.

Diversification Opportunities for Universal Health and CeoTronics

-0.24

Correlation Coefficient

Universal Health  CeoTronics

Very good diversification

The 3 months correlation between Universal and CeoTronics is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Realty and CeoTronics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CeoTronics AG 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 Realty are associated (or correlated) with CeoTronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CeoTronics AG has no effect on the direction of Universal Health i.e., Universal Health and CeoTronics go up and down completely randomly.

Pair Corralation between Universal Health and CeoTronics

Assuming the 90 days horizon Universal Health Realty is expected to generate 0.35 times more return on investment than CeoTronics. However, Universal Health Realty is 2.9 times less risky than CeoTronics. It trades about 0.08 of its potential returns per unit of risk. CeoTronics AG is currently generating about -0.02 per unit of risk. If you would invest  3,301  in Universal Health Realty on April 24, 2025 and sell it today you would earn a total of  184.00  from holding Universal Health Realty or generate 5.57% return on investment over 90 days.

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

Universal Health Realty  vs.  CeoTronics AG

Universal Health Realty

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Health Realty are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

CeoTronics AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days CeoTronics AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, CeoTronics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Universal Health and CeoTronics

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

The idea behind Universal Health Realty and CeoTronics AG 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.