Correlation Between Eastman Chemical and HCA Healthcare
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical 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 Eastman Chemical and HCA Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical Co and HCA Healthcare, you can compare the effects of market volatilities on Eastman Chemical 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 Eastman Chemical with a short position of HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and HCA Healthcare.
Diversification Opportunities for Eastman Chemical and HCA Healthcare
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eastman and HCA is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical Co and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and Eastman Chemical 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 Eastman Chemical Co 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 Eastman Chemical i.e., Eastman Chemical and HCA Healthcare go up and down completely randomly.
Pair Corralation between Eastman Chemical and HCA Healthcare
Assuming the 90 days trading horizon Eastman Chemical Co is expected to under-perform the HCA Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Eastman Chemical Co is 1.04 times less risky than HCA Healthcare. The stock trades about -0.54 of its potential returns per unit of risk. The HCA Healthcare is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 31,361 in HCA Healthcare on October 14, 2024 and sell it today you would lose (197.00) from holding HCA Healthcare or give up 0.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 85.0% |
| Values | Daily Returns |
Eastman Chemical Co vs. HCA Healthcare
Performance |
| Timeline |
| Eastman Chemical |
| HCA Healthcare |
Eastman Chemical and HCA Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and HCA Healthcare
The main advantage of trading using opposite Eastman Chemical and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical 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.| Eastman Chemical vs. Atalaya Mining | Eastman Chemical vs. New Residential Investment | Eastman Chemical vs. URU Metals | Eastman Chemical vs. Darden Restaurants |
| HCA Healthcare vs. Eastman Chemical Co | HCA Healthcare vs. Air Products Chemicals | HCA Healthcare vs. Sabre Insurance Group | HCA Healthcare vs. Clean Power Hydrogen |
Check out your portfolio center.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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