Correlation Between HCA Healthcare and Centaur Media

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

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

Diversification Opportunities for HCA Healthcare and Centaur Media

0.42

Correlation Coefficient

HCA Healthcare  Centaur Media

Very weak diversification

The 3 months correlation between HCA and Centaur is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media 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 Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and Centaur Media go up and down completely randomly.

Pair Corralation between HCA Healthcare and Centaur Media

Assuming the 90 days trading horizon HCA Healthcare is expected to generate 0.47 times more return on investment than Centaur Media. However, HCA Healthcare is 2.13 times less risky than Centaur Media. It trades about 0.03 of its potential returns per unit of risk. Centaur Media is currently generating about -0.02 per unit of risk. If you would invest  26,932  in HCA Healthcare on November 29, 2024 and sell it today you would earn a total of  5,337  from holding HCA Healthcare or generate 19.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

HCA Healthcare  vs.  Centaur Media

HCA Healthcare

Risk-Adjusted Performance

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 comparatively stable basic indicators, HCA Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Centaur Media

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centaur Media are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Centaur Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HCA Healthcare and Centaur Media

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

The idea behind HCA Healthcare and Centaur Media 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.