Correlation Between HCA Healthcare and Naturhouse Health

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

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

Diversification Opportunities for HCA Healthcare and Naturhouse Health

0.13

Correlation Coefficient

HCA Healthcare  Naturhouse Health

Average diversification

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

Pair Corralation between HCA Healthcare and Naturhouse Health

Assuming the 90 days trading horizon HCA Healthcare is expected to under-perform the Naturhouse Health. In addition to that, HCA Healthcare is 1.37 times more volatile than Naturhouse Health SA. It trades about -0.3 of its total potential returns per unit of risk. Naturhouse Health SA is currently generating about 0.11 per unit of volatility. If you would invest  164.00  in Naturhouse Health SA on September 1, 2024 and sell it today you would earn a total of  4.00  from holding Naturhouse Health SA or generate 2.44% return on investment over 90 days.

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

HCA Healthcare  vs.  Naturhouse Health SA

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.

Naturhouse Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Naturhouse Health SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with HCA Healthcare and Naturhouse Health

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

The idea behind HCA Healthcare and Naturhouse Health SA 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.