Correlation Between HCA Healthcare and Cairo Communication

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

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

Diversification Opportunities for HCA Healthcare and Cairo Communication

-0.32

Correlation Coefficient

HCA Healthcare  Cairo Communication

Very good diversification

The 3 months correlation between HCA and Cairo is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and Cairo Communication SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo Communication SpA and HCA Healthcare 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 HCA Healthcare are associated (or correlated) with Cairo Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo Communication SpA has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and Cairo Communication go up and down completely randomly.

Pair Corralation between HCA Healthcare and Cairo Communication

Assuming the 90 days trading horizon HCA Healthcare is expected to generate 18.63 times less return on investment than Cairo Communication. In addition to that, HCA Healthcare is 1.12 times more volatile than Cairo Communication SpA. It trades about 0.0 of its total potential returns per unit of risk. Cairo Communication SpA is currently generating about 0.08 per unit of volatility. If you would invest  206.00  in Cairo Communication SpA on September 1, 2024 and sell it today you would earn a total of  30.00  from holding Cairo Communication SpA or generate 14.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.23%
Values	Daily Returns

HCA Healthcare  vs.  Cairo Communication SpA

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 December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cairo Communication SpA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cairo Communication SpA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cairo Communication may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with HCA Healthcare and Cairo Communication

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

The idea behind HCA Healthcare and Cairo Communication SpA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.