Correlation Between HCA Holdings and HEALTHSOUTH Corp

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Can any of the company-specific risk be diversified away by investing in both HCA Holdings and HEALTHSOUTH Corp 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 Holdings and HEALTHSOUTH Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Holdings and HEALTHSOUTH Corp, you can compare the effects of market volatilities on HCA Holdings and HEALTHSOUTH Corp 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 Holdings with a short position of HEALTHSOUTH Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Holdings and HEALTHSOUTH Corp.

Diversification Opportunities for HCA Holdings and HEALTHSOUTH Corp

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between HCA and HEALTHSOUTH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HCA Holdings and HEALTHSOUTH Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEALTHSOUTH Corp and HCA Holdings 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 Holdings are associated (or correlated) with HEALTHSOUTH Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEALTHSOUTH Corp has no effect on the direction of HCA Holdings i.e., HCA Holdings and HEALTHSOUTH Corp go up and down completely randomly.

Pair Corralation between HCA Holdings and HEALTHSOUTH Corp

If you would invest  31,336  in HCA Holdings on December 29, 2023 and sell it today you would earn a total of  1,833  from holding HCA Holdings or generate 5.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

HCA Holdings  vs.  HEALTHSOUTH Corp

 Performance 
       Timeline  
HCA Holdings 

Risk-Adjusted Performance

21 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in HCA Holdings are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, HCA Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.
HEALTHSOUTH Corp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days HEALTHSOUTH Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, HEALTHSOUTH Corp is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

HCA Holdings and HEALTHSOUTH Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HCA Holdings and HEALTHSOUTH Corp

The main advantage of trading using opposite HCA Holdings and HEALTHSOUTH Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Holdings position performs unexpectedly, HEALTHSOUTH Corp 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 HEALTHSOUTH Corp will offset losses from the drop in HEALTHSOUTH Corp's long position.
The idea behind HCA Holdings and HEALTHSOUTH Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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