Correlation Between Basic Materials and HCA Healthcare,

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

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

Diversification Opportunities for Basic Materials and HCA Healthcare,

-0.12

Correlation Coefficient

Basic Materials  HCA Healthcare,

Good diversification

The 3 months correlation between Basic and HCA is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials and HCA Healthcare, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare, and Basic Materials 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 Basic Materials 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 Basic Materials i.e., Basic Materials and HCA Healthcare, go up and down completely randomly.

Pair Corralation between Basic Materials and HCA Healthcare,

Assuming the 90 days trading horizon Basic Materials is expected to generate 0.7 times more return on investment than HCA Healthcare,. However, Basic Materials is 1.42 times less risky than HCA Healthcare,. It trades about -0.17 of its potential returns per unit of risk. HCA Healthcare, is currently generating about -0.23 per unit of risk. If you would invest  583,680  in Basic Materials on October 6, 2024 and sell it today you would lose (45,491) from holding Basic Materials or give up 7.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.44%
Values	Daily Returns

Basic Materials  vs.  HCA Healthcare,

Pair Trading with Basic Materials and HCA Healthcare,

The main advantage of trading using opposite Basic Materials and HCA Healthcare, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials 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 Basic Materials 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.