Correlation Between HCA Healthcare and Software Circle
Can any of the company-specific risk be diversified away by investing in both HCA Healthcare and Software Circle 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 Software Circle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Healthcare and Software Circle plc, you can compare the effects of market volatilities on HCA Healthcare and Software Circle 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 Software Circle. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Healthcare and Software Circle.
Diversification Opportunities for HCA Healthcare and Software Circle
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HCA and Software is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and Software Circle plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Software Circle 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 Software Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Software Circle plc has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and Software Circle go up and down completely randomly.
Pair Corralation between HCA Healthcare and Software Circle
Assuming the 90 days trading horizon HCA Healthcare is expected to generate 3.84 times more return on investment than Software Circle. However, HCA Healthcare is 3.84 times more volatile than Software Circle plc. It trades about 0.03 of its potential returns per unit of risk. Software Circle plc is currently generating about 0.11 per unit of risk. If you would invest 25,339 in HCA Healthcare on October 25, 2024 and sell it today you would earn a total of 6,853 from holding HCA Healthcare or generate 27.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
HCA Healthcare vs. Software Circle plc
Performance |
| Timeline |
| HCA Healthcare |
| Software Circle plc |
HCA Healthcare and Software Circle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Healthcare and Software Circle
The main advantage of trading using opposite HCA Healthcare and Software Circle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Healthcare position performs unexpectedly, Software Circle 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 Software Circle will offset losses from the drop in Software Circle's long position.| HCA Healthcare vs. Seche Environnement SA | HCA Healthcare vs. Impax Environmental Markets | HCA Healthcare vs. Spotify Technology SA | HCA Healthcare vs. Oxford Technology 2 |
| Software Circle vs. Cardinal Health | Software Circle vs. Ecclesiastical Insurance Office | Software Circle vs. Synthomer plc | Software Circle vs. HCA Healthcare |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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