Correlation Between TRI CHEMICAL and HCA Healthcare

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

By analyzing existing cross correlation between TRI CHEMICAL LABORATINC and HCA Healthcare, you can compare the effects of market volatilities on TRI CHEMICAL and HCA Healthcare 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 TRI CHEMICAL with a short position of HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRI CHEMICAL and HCA Healthcare.

Diversification Opportunities for TRI CHEMICAL and HCA Healthcare

0.28

Correlation Coefficient

TRI CHEMICAL  HCA Healthcare

Modest diversification

The 3 months correlation between TRI and HCA is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding TRI CHEMICAL LABORATINC and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and TRI CHEMICAL 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 TRI CHEMICAL LABORATINC are associated (or correlated) with HCA Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Healthcare has no effect on the direction of TRI CHEMICAL i.e., TRI CHEMICAL and HCA Healthcare go up and down completely randomly.

Pair Corralation between TRI CHEMICAL and HCA Healthcare

Assuming the 90 days horizon TRI CHEMICAL LABORATINC is expected to generate 2.04 times more return on investment than HCA Healthcare. However, TRI CHEMICAL is 2.04 times more volatile than HCA Healthcare. It trades about 0.03 of its potential returns per unit of risk. HCA Healthcare is currently generating about 0.04 per unit of risk. If you would invest  1,751  in TRI CHEMICAL LABORATINC on October 24, 2024 and sell it today you would earn a total of  309.00  from holding TRI CHEMICAL LABORATINC or generate 17.65% return on investment over 90 days.

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

TRI CHEMICAL LABORATINC  vs.  HCA Healthcare

TRI CHEMICAL LABORATINC

Risk-Adjusted Performance

3 of 100

Insignificant

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

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TRI CHEMICAL and HCA Healthcare

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

The idea behind TRI CHEMICAL LABORATINC and HCA Healthcare 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.