Correlation Between HCA Healthcare and AP Moeller

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

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

Diversification Opportunities for HCA Healthcare and AP Moeller

-0.05

Correlation Coefficient

HCA Healthcare  AP Moeller

Good diversification

The 3 months correlation between HCA and 0O77 is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and AP Moeller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Moeller 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 AP Moeller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Moeller has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and AP Moeller go up and down completely randomly.

Pair Corralation between HCA Healthcare and AP Moeller

Assuming the 90 days trading horizon HCA Healthcare is expected to generate 0.6 times more return on investment than AP Moeller. However, HCA Healthcare is 1.68 times less risky than AP Moeller. It trades about 0.09 of its potential returns per unit of risk. AP Moeller is currently generating about 0.05 per unit of risk. If you would invest  30,044  in HCA Healthcare on December 21, 2024 and sell it today you would earn a total of  3,347  from holding HCA Healthcare or generate 11.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

HCA Healthcare  vs.  AP Moeller

HCA Healthcare

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HCA Healthcare are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HCA Healthcare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

AP Moeller

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AP Moeller are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AP Moeller may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HCA Healthcare and AP Moeller

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

The idea behind HCA Healthcare and AP Moeller 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 Stocks Directory module to find actively traded stocks across global markets.