Correlation Between Naturhouse Health and HCA Healthcare

Can any of the company-specific risk be diversified away by investing in both Naturhouse 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 Naturhouse 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 Naturhouse Health SA and HCA Healthcare, you can compare the effects of market volatilities on Naturhouse 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 Naturhouse Health with a short position of HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naturhouse Health and HCA Healthcare.

Diversification Opportunities for Naturhouse Health and HCA Healthcare

0.13

Correlation Coefficient

Naturhouse Health  HCA Healthcare

Average diversification

The 3 months correlation between Naturhouse and HCA is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Naturhouse Health SA and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and Naturhouse 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 Naturhouse Health SA 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 Naturhouse Health i.e., Naturhouse Health and HCA Healthcare go up and down completely randomly.

Pair Corralation between Naturhouse Health and HCA Healthcare

Assuming the 90 days trading horizon Naturhouse Health SA is expected to generate 0.67 times more return on investment than HCA Healthcare. However, Naturhouse Health SA is 1.5 times less risky than HCA Healthcare. It trades about -0.08 of its potential returns per unit of risk. HCA Healthcare is currently generating about -0.15 per unit of risk. If you would invest  180.00  in Naturhouse Health SA on September 3, 2024 and sell it today you would lose (12.00) from holding Naturhouse Health SA or give up 6.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Naturhouse Health SA  vs.  HCA Healthcare

Naturhouse Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Naturhouse Health SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Naturhouse Health is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

HCA Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HCA Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Naturhouse Health and HCA Healthcare

The main advantage of trading using opposite Naturhouse Health and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naturhouse 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.

The idea behind Naturhouse Health SA and HCA Healthcare 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.