Correlation Between Lendinvest PLC and HCA Healthcare

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

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

Diversification Opportunities for Lendinvest PLC and HCA Healthcare

0.56

Correlation Coefficient

Lendinvest PLC  HCA Healthcare

Very weak diversification

The 3 months correlation between Lendinvest and HCA is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lendinvest PLC and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and Lendinvest PLC 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 Lendinvest 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 Lendinvest PLC i.e., Lendinvest PLC and HCA Healthcare go up and down completely randomly.

Pair Corralation between Lendinvest PLC and HCA Healthcare

Assuming the 90 days trading horizon Lendinvest PLC is expected to under-perform the HCA Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Lendinvest PLC is 3.11 times less risky than HCA Healthcare. The stock trades about -0.07 of its potential returns per unit of risk. The HCA Healthcare is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  23,686  in HCA Healthcare on October 9, 2024 and sell it today you would earn a total of  6,136  from holding HCA Healthcare or generate 25.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Lendinvest PLC  vs.  HCA Healthcare

Lendinvest PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lendinvest PLC 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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lendinvest PLC and HCA Healthcare

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