Correlation Between Universal Health and Alfi

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Can any of the company-specific risk be diversified away by investing in both Universal Health and Alfi 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 Alfi 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 Alfi Inc, you can compare the effects of market volatilities on Universal Health and Alfi 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 Alfi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Alfi.

Diversification Opportunities for Universal Health and Alfi

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Universal and Alfi is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and Alfi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfi Inc 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 Alfi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfi Inc has no effect on the direction of Universal Health i.e., Universal Health and Alfi go up and down completely randomly.

Pair Corralation between Universal Health and Alfi

Considering the 90-day investment horizon Universal Health Services is expected to generate 0.64 times more return on investment than Alfi. However, Universal Health Services is 1.56 times less risky than Alfi. It trades about -0.16 of its potential returns per unit of risk. Alfi Inc is currently generating about -0.27 per unit of risk. If you would invest  10,994  in Universal Health Services on July 8, 2022 and sell it today you would lose (1,665)  from holding Universal Health Services or give up 15.14% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Universal Health Services  vs.  Alfi Inc

 Performance (%) 
       Timeline  
Universal Health Services 
Universal Performance
0 of 100
Over the last 90 days Universal Health Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Universal Price Channel

Alfi Inc 
Alfi Performance
0 of 100
Over the last 90 days Alfi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in November 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Alfi Price Channel

Universal Health and Alfi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Universal Health and Alfi

The main advantage of trading using opposite Universal Health and Alfi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, Alfi 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 Alfi will offset losses from the drop in Alfi's long position.
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The idea behind Universal Health Services and Alfi Inc 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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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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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