Correlation Between HCA Healthcare and One Media

Can any of the company-specific risk be diversified away by investing in both HCA Healthcare and One 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 One 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 One Media iP, you can compare the effects of market volatilities on HCA Healthcare and One 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 One Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Healthcare and One Media.

Diversification Opportunities for HCA Healthcare and One Media

0.23

Correlation Coefficient

HCA Healthcare  One Media

Modest diversification

The 3 months correlation between HCA and One is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and One Media iP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Media iP 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 One Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Media iP has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and One Media go up and down completely randomly.

Pair Corralation between HCA Healthcare and One Media

Assuming the 90 days trading horizon HCA Healthcare is expected to generate 1.6 times more return on investment than One Media. However, HCA Healthcare is 1.6 times more volatile than One Media iP. It trades about 0.09 of its potential returns per unit of risk. One Media iP is currently generating about 0.01 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 Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

HCA Healthcare  vs.  One Media iP

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 unsteady basic indicators, HCA Healthcare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

One Media iP

Risk-Adjusted Performance

Very Weak

Over the last 90 days One Media iP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, One Media is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with HCA Healthcare and One Media

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

The idea behind HCA Healthcare and One Media iP 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.