Correlation Between Gaming Realms and HCA Healthcare

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

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

Diversification Opportunities for Gaming Realms and HCA Healthcare

0.23

Correlation Coefficient

Gaming Realms  HCA Healthcare

Modest diversification

The 3 months correlation between Gaming and HCA is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Realms plc and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and Gaming Realms 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 Gaming Realms plc 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 Gaming Realms i.e., Gaming Realms and HCA Healthcare go up and down completely randomly.

Pair Corralation between Gaming Realms and HCA Healthcare

Assuming the 90 days trading horizon Gaming Realms plc is expected to under-perform the HCA Healthcare. In addition to that, Gaming Realms is 1.08 times more volatile than HCA Healthcare. It trades about -0.01 of its total potential returns per unit of risk. HCA Healthcare is currently generating about 0.08 per unit of volatility. If you would invest  30,044  in HCA Healthcare on December 22, 2024 and sell it today you would earn a total of  2,938  from holding HCA Healthcare or generate 9.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Gaming Realms plc  vs.  HCA Healthcare

Gaming Realms plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gaming Realms plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Gaming Realms is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

HCA Healthcare

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HCA Healthcare are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HCA Healthcare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gaming Realms and HCA Healthcare

The main advantage of trading using opposite Gaming Realms and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Realms 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 Gaming Realms plc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..