Correlation Between UnitedHealth Group and Novra Technologies

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

By analyzing existing cross correlation between UnitedHealth Group CDR and Novra Technologies, you can compare the effects of market volatilities on UnitedHealth Group and Novra Technologies 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 UnitedHealth Group with a short position of Novra Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Novra Technologies.

Diversification Opportunities for UnitedHealth Group and Novra Technologies

-0.13

Correlation Coefficient

UnitedHealth Group  Novra Technologies

Good diversification

The 3 months correlation between UnitedHealth and Novra is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group CDR and Novra Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novra Technologies and UnitedHealth Group 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 UnitedHealth Group CDR are associated (or correlated) with Novra Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novra Technologies has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Novra Technologies go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Novra Technologies

Assuming the 90 days trading horizon UnitedHealth Group is expected to generate 8.33 times less return on investment than Novra Technologies. But when comparing it to its historical volatility, UnitedHealth Group CDR is 7.73 times less risky than Novra Technologies. It trades about 0.08 of its potential returns per unit of risk. Novra Technologies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Novra Technologies on August 2, 2024 and sell it today you would earn a total of  5.00  from holding Novra Technologies or generate 71.43% return on investment over 90 days.

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

UnitedHealth Group CDR  vs.  Novra Technologies

UnitedHealth Group CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UnitedHealth Group CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, UnitedHealth Group is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Novra Technologies

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Novra Technologies are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Novra Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UnitedHealth Group and Novra Technologies

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

The idea behind UnitedHealth Group CDR and Novra Technologies 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.