Correlation Between Optima Health and HCA Healthcare
Can any of the company-specific risk be diversified away by investing in both Optima Health 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 Optima Health and HCA Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optima Health plc and HCA Healthcare, you can compare the effects of market volatilities on Optima Health 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 Optima Health with a short position of HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and HCA Healthcare.
Diversification Opportunities for Optima Health and HCA Healthcare
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Optima and HCA is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and Optima Health 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 Optima Health plc 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 Optima Health i.e., Optima Health and HCA Healthcare go up and down completely randomly.
Pair Corralation between Optima Health and HCA Healthcare
Assuming the 90 days trading horizon Optima Health is expected to generate 1.92 times less return on investment than HCA Healthcare. But when comparing it to its historical volatility, Optima Health plc is 1.78 times less risky than HCA Healthcare. It trades about 0.19 of its potential returns per unit of risk. HCA Healthcare is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 30,435 in HCA Healthcare on October 25, 2024 and sell it today you would earn a total of 1,517 from holding HCA Healthcare or generate 4.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Optima Health plc vs. HCA Healthcare
Performance |
| Timeline |
| Optima Health plc |
| HCA Healthcare |
Optima Health and HCA Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and HCA Healthcare
The main advantage of trading using opposite Optima Health and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health 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.| Optima Health vs. Toyota Motor Corp | Optima Health vs. SoftBank Group Corp | Optima Health vs. OTP Bank Nyrt | Optima Health vs. Agilent Technologies |
| HCA Healthcare vs. Axfood AB | HCA Healthcare vs. Naturhouse Health SA | HCA Healthcare vs. Optima Health plc | HCA Healthcare vs. Primary Health Properties |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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