Correlation Between Team Internet and HCA Healthcare

Can any of the company-specific risk be diversified away by investing in both Team Internet 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 Team Internet and HCA Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Team Internet Group and HCA Healthcare, you can compare the effects of market volatilities on Team Internet 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 Team Internet with a short position of HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Team Internet and HCA Healthcare.

Diversification Opportunities for Team Internet and HCA Healthcare

0.81

Correlation Coefficient

Team Internet  HCA Healthcare

Very poor diversification

The 3 months correlation between Team and HCA is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Team Internet Group and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and Team Internet 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 Team Internet Group 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 Team Internet i.e., Team Internet and HCA Healthcare go up and down completely randomly.

Pair Corralation between Team Internet and HCA Healthcare

Assuming the 90 days trading horizon Team Internet Group is expected to under-perform the HCA Healthcare. In addition to that, Team Internet is 2.21 times more volatile than HCA Healthcare. It trades about -0.16 of its total potential returns per unit of risk. HCA Healthcare is currently generating about -0.14 per unit of volatility. If you would invest  39,164  in HCA Healthcare on September 1, 2024 and sell it today you would lose (6,601) from holding HCA Healthcare or give up 16.85% of portfolio value over 90 days.

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

Team Internet Group  vs.  HCA Healthcare

Team Internet Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Team Internet Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Team Internet and HCA Healthcare

The main advantage of trading using opposite Team Internet and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Team Internet 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 Team Internet Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.