Correlation Between URU Metals and HCA Healthcare

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

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

Diversification Opportunities for URU Metals and HCA Healthcare

-0.66

Correlation Coefficient

URU Metals  HCA Healthcare

Excellent diversification

The 3 months correlation between URU and HCA is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding URU Metals and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and URU Metals 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 URU Metals 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 URU Metals i.e., URU Metals and HCA Healthcare go up and down completely randomly.

Pair Corralation between URU Metals and HCA Healthcare

Assuming the 90 days trading horizon URU Metals is expected to generate 4.94 times more return on investment than HCA Healthcare. However, URU Metals is 4.94 times more volatile than HCA Healthcare. It trades about 0.18 of its potential returns per unit of risk. HCA Healthcare is currently generating about -0.32 per unit of risk. If you would invest  13,500  in URU Metals on September 23, 2024 and sell it today you would earn a total of  2,500  from holding URU Metals or generate 18.52% return on investment over 90 days.

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

URU Metals  vs.  HCA Healthcare

URU Metals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in URU Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, URU Metals exhibited solid returns over the last few months and may actually be approaching a breakup point.

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

Pair Trading with URU Metals and HCA Healthcare

The main advantage of trading using opposite URU Metals and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if URU Metals 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 URU Metals 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.