Correlation Between HCA Healthcare and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both HCA Healthcare and Fresenius Medical 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 Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Healthcare and Fresenius Medical Care, you can compare the effects of market volatilities on HCA Healthcare and Fresenius Medical 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 Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Healthcare and Fresenius Medical.
Diversification Opportunities for HCA Healthcare and Fresenius Medical
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HCA and Fresenius is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and Fresenius Medical Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius Medical Care 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 Fresenius Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius Medical Care has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and Fresenius Medical go up and down completely randomly.
Pair Corralation between HCA Healthcare and Fresenius Medical
Assuming the 90 days trading horizon HCA Healthcare is expected to generate 0.61 times more return on investment than Fresenius Medical. However, HCA Healthcare is 1.63 times less risky than Fresenius Medical. It trades about 0.03 of its potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.02 per unit of risk. If you would invest 26,139 in HCA Healthcare on October 12, 2024 and sell it today you would earn a total of 3,921 from holding HCA Healthcare or generate 15.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCA Healthcare vs. Fresenius Medical Care
Performance |
| Timeline |
| HCA Healthcare |
| Fresenius Medical Care |
HCA Healthcare and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Healthcare and Fresenius Medical
The main advantage of trading using opposite HCA Healthcare and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Healthcare position performs unexpectedly, Fresenius Medical 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 Fresenius Medical will offset losses from the drop in Fresenius Medical's long position.| HCA Healthcare vs. Air New Zealand | HCA Healthcare vs. Ryanair Holdings plc | HCA Healthcare vs. Nexstar Media Group | HCA Healthcare vs. Wizz Air Holdings |
| Fresenius Medical vs. Universal Health Services | Fresenius Medical vs. Superior Plus Corp | Fresenius Medical vs. NMI Holdings | Fresenius Medical vs. SIVERS SEMICONDUCTORS AB |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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