Correlation Between SPORT LISBOA and HCA Healthcare

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

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

Diversification Opportunities for SPORT LISBOA and HCA Healthcare

-0.22

Correlation Coefficient

SPORT LISBOA  HCA Healthcare

Very good diversification

The 3 months correlation between SPORT and HCA is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and SPORT LISBOA 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 SPORT LISBOA E 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 SPORT LISBOA i.e., SPORT LISBOA and HCA Healthcare go up and down completely randomly.

Pair Corralation between SPORT LISBOA and HCA Healthcare

Assuming the 90 days horizon SPORT LISBOA E is expected to generate 1.84 times more return on investment than HCA Healthcare. However, SPORT LISBOA is 1.84 times more volatile than HCA Healthcare. It trades about 0.04 of its potential returns per unit of risk. HCA Healthcare is currently generating about 0.03 per unit of risk. If you would invest  306.00  in SPORT LISBOA E on December 19, 2024 and sell it today you would earn a total of  12.00  from holding SPORT LISBOA E or generate 3.92% return on investment over 90 days.

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

SPORT LISBOA E  vs.  HCA Healthcare

SPORT LISBOA E

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPORT LISBOA E are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SPORT LISBOA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 nearly stable basic indicators, HCA Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SPORT LISBOA and HCA Healthcare

The main advantage of trading using opposite SPORT LISBOA and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPORT LISBOA 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 SPORT LISBOA E 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..