Correlation Between Amedeo Air and HCA Healthcare

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

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

Diversification Opportunities for Amedeo Air and HCA Healthcare

-0.85

Correlation Coefficient

Amedeo Air  HCA Healthcare

Pay attention - limited upside

The 3 months correlation between Amedeo and HCA is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Amedeo Air Four and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and Amedeo Air 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 Amedeo Air Four 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 Amedeo Air i.e., Amedeo Air and HCA Healthcare go up and down completely randomly.

Pair Corralation between Amedeo Air and HCA Healthcare

Assuming the 90 days trading horizon Amedeo Air Four is expected to generate 0.51 times more return on investment than HCA Healthcare. However, Amedeo Air Four is 1.97 times less risky than HCA Healthcare. It trades about 0.28 of its potential returns per unit of risk. HCA Healthcare is currently generating about -0.04 per unit of risk. If you would invest  4,025  in Amedeo Air Four on September 23, 2024 and sell it today you would earn a total of  1,515  from holding Amedeo Air Four or generate 37.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.23%
Values	Daily Returns

Amedeo Air Four  vs.  HCA Healthcare

Amedeo Air Four

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amedeo Air Four are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Amedeo Air may actually be approaching a critical reversion point that can send shares even higher in January 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. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Amedeo Air and HCA Healthcare

The main advantage of trading using opposite Amedeo Air and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amedeo Air 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 Amedeo Air Four 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.