Correlation Between HCA Healthcare and Superior Plus
Can any of the company-specific risk be diversified away by investing in both HCA Healthcare and Superior Plus 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 Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Healthcare and Superior Plus Corp, you can compare the effects of market volatilities on HCA Healthcare and Superior Plus 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 Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Healthcare and Superior Plus.
Diversification Opportunities for HCA Healthcare and Superior Plus
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HCA and Superior is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp 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 Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and Superior Plus go up and down completely randomly.
Pair Corralation between HCA Healthcare and Superior Plus
Assuming the 90 days horizon HCA Healthcare is expected to generate 0.72 times more return on investment than Superior Plus. However, HCA Healthcare is 1.38 times less risky than Superior Plus. It trades about 0.05 of its potential returns per unit of risk. Superior Plus Corp is currently generating about -0.02 per unit of risk. If you would invest 22,207 in HCA Healthcare on September 13, 2024 and sell it today you would earn a total of 7,893 from holding HCA Healthcare or generate 35.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCA Healthcare vs. Superior Plus Corp
Performance |
| Timeline |
| HCA Healthcare |
| Superior Plus Corp |
HCA Healthcare and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Healthcare and Superior Plus
The main advantage of trading using opposite HCA Healthcare and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Healthcare position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| HCA Healthcare vs. MI Homes | HCA Healthcare vs. Guidewire Software | HCA Healthcare vs. Autohome ADR | HCA Healthcare vs. KB HOME |
| Superior Plus vs. HF SINCLAIR P | Superior Plus vs. PT Indofood Sukses | Superior Plus vs. SENECA FOODS A | Superior Plus vs. ScanSource |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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