Correlation Between HCA Healthcare, and Biogen

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

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

Diversification Opportunities for HCA Healthcare, and Biogen

-0.11

Correlation Coefficient

HCA Healthcare,  Biogen

Good diversification

The 3 months correlation between HCA and Biogen is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare, and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc 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 Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of HCA Healthcare, i.e., HCA Healthcare, and Biogen go up and down completely randomly.

Pair Corralation between HCA Healthcare, and Biogen

Assuming the 90 days trading horizon HCA Healthcare, is expected to generate 0.85 times more return on investment than Biogen. However, HCA Healthcare, is 1.17 times less risky than Biogen. It trades about 0.04 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.08 per unit of risk. If you would invest  9,091  in HCA Healthcare, on December 24, 2024 and sell it today you would earn a total of  255.00  from holding HCA Healthcare, or generate 2.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

HCA Healthcare,  vs.  Biogen Inc

HCA Healthcare,

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HCA Healthcare, are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, HCA Healthcare, is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Biogen Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biogen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with HCA Healthcare, and Biogen

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

The idea behind HCA Healthcare, and Biogen Inc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.