Correlation Between HCA Healthcare and TMT Investments
Can any of the company-specific risk be diversified away by investing in both HCA Healthcare and TMT Investments 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 TMT Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Healthcare and TMT Investments PLC, you can compare the effects of market volatilities on HCA Healthcare and TMT Investments 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 TMT Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Healthcare and TMT Investments.
Diversification Opportunities for HCA Healthcare and TMT Investments
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HCA and TMT is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and TMT Investments PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMT Investments 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 TMT Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMT Investments PLC has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and TMT Investments go up and down completely randomly.
Pair Corralation between HCA Healthcare and TMT Investments
Assuming the 90 days trading horizon HCA Healthcare is expected to under-perform the TMT Investments. But the stock apears to be less risky and, when comparing its historical volatility, HCA Healthcare is 1.75 times less risky than TMT Investments. The stock trades about -0.38 of its potential returns per unit of risk. The TMT Investments PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 302.00 in TMT Investments PLC on September 3, 2024 and sell it today you would earn a total of 4.00 from holding TMT Investments PLC or generate 1.32% 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. TMT Investments PLC
Performance |
| Timeline |
| HCA Healthcare |
| TMT Investments PLC |
HCA Healthcare and TMT Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Healthcare and TMT Investments
The main advantage of trading using opposite HCA Healthcare and TMT Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Healthcare position performs unexpectedly, TMT Investments 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 TMT Investments will offset losses from the drop in TMT Investments' long position.| HCA Healthcare vs. Catalyst Media Group | HCA Healthcare vs. CATLIN GROUP | HCA Healthcare vs. Magnora ASA | HCA Healthcare vs. RTW Venture Fund |
| TMT Investments vs. Telecom Italia SpA | TMT Investments vs. Spirent Communications plc | TMT Investments vs. HCA Healthcare | TMT Investments vs. Batm Advanced Communications |
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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