Correlation Between Uber Technologies and HCA Healthcare

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

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

Diversification Opportunities for Uber Technologies and HCA Healthcare

-0.23

Correlation Coefficient

Uber Technologies  HCA Healthcare

Very good diversification

The 3 months correlation between Uber and HCA is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and Uber Technologies 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 Uber Technologies are associated (or correlated) with HCA Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Healthcare has no effect on the direction of Uber Technologies i.e., Uber Technologies and HCA Healthcare go up and down completely randomly.

Pair Corralation between Uber Technologies and HCA Healthcare

Assuming the 90 days trading horizon Uber Technologies is expected to generate 0.28 times more return on investment than HCA Healthcare. However, Uber Technologies is 3.55 times less risky than HCA Healthcare. It trades about 0.12 of its potential returns per unit of risk. HCA Healthcare is currently generating about -0.14 per unit of risk. If you would invest  6,920  in Uber Technologies on September 2, 2024 and sell it today you would earn a total of  295.00  from holding Uber Technologies or generate 4.26% return on investment over 90 days.

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

Uber Technologies  vs.  HCA Healthcare

Uber Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Uber Technologies is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

HCA Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HCA Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Uber Technologies and HCA Healthcare

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

The idea behind Uber Technologies and HCA Healthcare 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 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.