Correlation Between TITAN MACHINERY and Ramsay Health

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

Diversification Opportunities for TITAN MACHINERY and Ramsay Health

-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between TITAN and Ramsay is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding TITAN MACHINERY and Ramsay Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramsay Health Care and TITAN MACHINERY 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 TITAN MACHINERY are associated (or correlated) with Ramsay Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramsay Health Care has no effect on the direction of TITAN MACHINERY i.e., TITAN MACHINERY and Ramsay Health go up and down completely randomly.

Pair Corralation between TITAN MACHINERY and Ramsay Health

Assuming the 90 days trading horizon TITAN MACHINERY is expected to under-perform the Ramsay Health. In addition to that, TITAN MACHINERY is 1.99 times more volatile than Ramsay Health Care. It trades about -0.05 of its total potential returns per unit of risk. Ramsay Health Care is currently generating about -0.07 per unit of volatility. If you would invest  3,924  in Ramsay Health Care on September 23, 2024 and sell it today you would lose (1,884) from holding Ramsay Health Care or give up 48.01% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

TITAN MACHINERY  vs.  Ramsay Health Care

 Performance 
       Timeline  
TITAN MACHINERY 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in TITAN MACHINERY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, TITAN MACHINERY is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
Ramsay Health Care 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ramsay Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

TITAN MACHINERY and Ramsay Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TITAN MACHINERY and Ramsay Health

The main advantage of trading using opposite TITAN MACHINERY and Ramsay Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TITAN MACHINERY position performs unexpectedly, Ramsay Health 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 Ramsay Health will offset losses from the drop in Ramsay Health's long position.
The idea behind TITAN MACHINERY and Ramsay Health Care 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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