Correlation Between Sumitomo Mitsui and Ramsay Health
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui 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 Sumitomo Mitsui and Ramsay Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Mitsui Construction and Ramsay Health Care, you can compare the effects of market volatilities on Sumitomo Mitsui 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 Sumitomo Mitsui with a short position of Ramsay Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Ramsay Health.
Diversification Opportunities for Sumitomo Mitsui and Ramsay Health
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Ramsay is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction 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 Sumitomo Mitsui 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 Sumitomo Mitsui Construction 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 Sumitomo Mitsui i.e., Sumitomo Mitsui and Ramsay Health go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Ramsay Health
Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to generate 0.94 times more return on investment than Ramsay Health. However, Sumitomo Mitsui Construction is 1.06 times less risky than Ramsay Health. It trades about -0.01 of its potential returns per unit of risk. Ramsay Health Care is currently generating about -0.08 per unit of risk. If you would invest 294.00 in Sumitomo Mitsui Construction on October 10, 2024 and sell it today you would lose (46.00) from holding Sumitomo Mitsui Construction or give up 15.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sumitomo Mitsui Construction vs. Ramsay Health Care
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| Ramsay Health Care |
Sumitomo Mitsui and Ramsay Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Ramsay Health
The main advantage of trading using opposite Sumitomo Mitsui and Ramsay Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui 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.| Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc |
| Ramsay Health vs. Ryanair Holdings plc | Ramsay Health vs. Haier Smart Home | Ramsay Health vs. Fair Isaac Corp | Ramsay Health vs. FORWARD AIR P |
Check out your portfolio center.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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