Correlation Between HCA Healthcare, and International Business

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

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

Diversification Opportunities for HCA Healthcare, and International Business

-0.47

Correlation Coefficient

HCA Healthcare,  International Business

Very good diversification

The 3 months correlation between HCA and International is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare, and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of HCA Healthcare, i.e., HCA Healthcare, and International Business go up and down completely randomly.

Pair Corralation between HCA Healthcare, and International Business

Assuming the 90 days trading horizon HCA Healthcare, is expected to under-perform the International Business. In addition to that, HCA Healthcare, is 1.13 times more volatile than International Business Machines. It trades about -0.09 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.09 per unit of volatility. If you would invest  123,645  in International Business Machines on October 25, 2024 and sell it today you would earn a total of  9,247  from holding International Business Machines or generate 7.48% return on investment over 90 days.

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

HCA Healthcare,  vs.  International Business Machine

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 latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

International Business

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, International Business may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HCA Healthcare, and International Business

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

The idea behind HCA Healthcare, and International Business Machines 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.