Correlation Between HCA Healthcare and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both HCA Healthcare and Gamma Communications 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 HCA Healthcare and Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Healthcare and Gamma Communications PLC, you can compare the effects of market volatilities on HCA Healthcare and Gamma Communications 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 HCA Healthcare with a short position of Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Healthcare and Gamma Communications.
Diversification Opportunities for HCA Healthcare and Gamma Communications
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between HCA and Gamma is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and Gamma Communications PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications PLC and HCA Healthcare 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 HCA Healthcare are associated (or correlated) with Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications PLC has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and Gamma Communications go up and down completely randomly.
Pair Corralation between HCA Healthcare and Gamma Communications
Assuming the 90 days trading horizon HCA Healthcare is expected to generate 1.04 times more return on investment than Gamma Communications. However, HCA Healthcare is 1.04 times more volatile than Gamma Communications PLC. It trades about 0.32 of its potential returns per unit of risk. Gamma Communications PLC is currently generating about -0.39 per unit of risk. If you would invest 29,769 in HCA Healthcare on November 6, 2024 and sell it today you would earn a total of 3,724 from holding HCA Healthcare or generate 12.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCA Healthcare vs. Gamma Communications PLC
Performance |
| Timeline |
| HCA Healthcare |
| Gamma Communications PLC |
HCA Healthcare and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Healthcare and Gamma Communications
The main advantage of trading using opposite HCA Healthcare and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Healthcare position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| HCA Healthcare vs. Samsung Electronics Co | HCA Healthcare vs. Samsung Electronics Co | HCA Healthcare vs. Toyota Motor Corp | HCA Healthcare vs. Reliance Industries Ltd |
| Gamma Communications vs. Eastman Chemical Co | Gamma Communications vs. Scandinavian Tobacco Group | Gamma Communications vs. AfriTin Mining | Gamma Communications vs. McEwen Mining |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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