Correlation Between XLMedia PLC and HCA Healthcare

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

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

Diversification Opportunities for XLMedia PLC and HCA Healthcare

-0.36

Correlation Coefficient

XLMedia PLC  HCA Healthcare

Very good diversification

The 3 months correlation between XLMedia and HCA is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and XLMedia PLC 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 XLMedia 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 XLMedia PLC i.e., XLMedia PLC and HCA Healthcare go up and down completely randomly.

Pair Corralation between XLMedia PLC and HCA Healthcare

Assuming the 90 days trading horizon XLMedia PLC is expected to under-perform the HCA Healthcare. In addition to that, XLMedia PLC is 5.0 times more volatile than HCA Healthcare. It trades about -0.24 of its total potential returns per unit of risk. HCA Healthcare is currently generating about -0.36 per unit of volatility. If you would invest  32,944  in HCA Healthcare on September 27, 2024 and sell it today you would lose (2,509) from holding HCA Healthcare or give up 7.62% of portfolio value over 90 days.

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

XLMedia PLC  vs.  HCA Healthcare

XLMedia PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XLMedia PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, XLMedia PLC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with XLMedia PLC and HCA Healthcare

The main advantage of trading using opposite XLMedia PLC and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XLMedia PLC 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 XLMedia PLC 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.