Correlation Between HCA Healthcare and Cardiff Property

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

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

Diversification Opportunities for HCA Healthcare and Cardiff Property

-0.74

Correlation Coefficient

HCA Healthcare  Cardiff Property

Pay attention - limited upside

The 3 months correlation between HCA and Cardiff is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and Cardiff Property PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardiff Property PLC 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 Cardiff Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardiff Property PLC has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and Cardiff Property go up and down completely randomly.

Pair Corralation between HCA Healthcare and Cardiff Property

Assuming the 90 days trading horizon HCA Healthcare is expected to under-perform the Cardiff Property. In addition to that, HCA Healthcare is 2.88 times more volatile than Cardiff Property PLC. It trades about -0.02 of its total potential returns per unit of risk. Cardiff Property PLC is currently generating about 0.09 per unit of volatility. If you would invest  230,000  in Cardiff Property PLC on October 4, 2024 and sell it today you would earn a total of  15,000  from holding Cardiff Property PLC or generate 6.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.43%
Values	Daily Returns

HCA Healthcare  vs.  Cardiff Property PLC

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cardiff Property PLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cardiff Property PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Cardiff Property may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HCA Healthcare and Cardiff Property

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

The idea behind HCA Healthcare and Cardiff Property PLC 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.