Correlation Between Aluminumof China and HCA Healthcare
Can any of the company-specific risk be diversified away by investing in both Aluminumof China and HCA Healthcare 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 Aluminumof China and HCA Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and HCA Healthcare, you can compare the effects of market volatilities on Aluminumof China and HCA Healthcare 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 Aluminumof China with a short position of HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and HCA Healthcare.
Diversification Opportunities for Aluminumof China and HCA Healthcare
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aluminumof and HCA is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and Aluminumof China 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 Aluminum of are associated (or correlated) with HCA Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Healthcare has no effect on the direction of Aluminumof China i.e., Aluminumof China and HCA Healthcare go up and down completely randomly.
Pair Corralation between Aluminumof China and HCA Healthcare
Assuming the 90 days horizon Aluminum of is expected to generate 2.12 times more return on investment than HCA Healthcare. However, Aluminumof China is 2.12 times more volatile than HCA Healthcare. It trades about 0.09 of its potential returns per unit of risk. HCA Healthcare is currently generating about 0.08 per unit of risk. If you would invest 30.00 in Aluminum of on September 4, 2024 and sell it today you would earn a total of 26.00 from holding Aluminum of or generate 86.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Aluminum of vs. HCA Healthcare
Performance |
| Timeline |
| Aluminumof China |
| HCA Healthcare |
Aluminumof China and HCA Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and HCA Healthcare
The main advantage of trading using opposite Aluminumof China and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China position performs unexpectedly, HCA Healthcare 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 HCA Healthcare will offset losses from the drop in HCA Healthcare's long position.| Aluminumof China vs. FIREWEED METALS P | Aluminumof China vs. Lion One Metals | Aluminumof China vs. Kaiser Aluminum | Aluminumof China vs. Ultra Clean Holdings |
| HCA Healthcare vs. SWISS WATER DECAFFCOFFEE | HCA Healthcare vs. UNIVMUSIC GRPADR050 | HCA Healthcare vs. MELIA HOTELS | HCA Healthcare vs. COVIVIO HOTELS INH |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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