Correlation Between Primary Health and HCA Healthcare

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

Diversification Opportunities for Primary Health and HCA Healthcare

-0.17

Correlation Coefficient

Primary Health  HCA Healthcare

Good diversification

The 3 months correlation between Primary and HCA is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Primary Health Properties and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and Primary 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 Primary Health Properties 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 Primary Health i.e., Primary Health and HCA Healthcare go up and down completely randomly.

Pair Corralation between Primary Health and HCA Healthcare

Assuming the 90 days trading horizon Primary Health Properties is expected to under-perform the HCA Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Primary Health Properties is 1.35 times less risky than HCA Healthcare. The stock trades about -0.07 of its potential returns per unit of risk. The HCA Healthcare is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  32,278  in HCA Healthcare on April 25, 2025 and sell it today you would earn a total of  2,952  from holding HCA Healthcare or generate 9.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Primary Health Properties  vs.  HCA Healthcare

Primary Health Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Primary Health Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Primary Health is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

HCA Healthcare

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HCA Healthcare are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, HCA Healthcare may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Primary Health and HCA Healthcare

The main advantage of trading using opposite Primary Health and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primary 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 Primary Health Properties 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.