Correlation Between Alcoa and Ramsay Health
Can any of the company-specific risk be diversified away by investing in both Alcoa 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 Alcoa and Ramsay Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Inc and Ramsay Health Care, you can compare the effects of market volatilities on Alcoa 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 Alcoa with a short position of Ramsay Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa and Ramsay Health.
Diversification Opportunities for Alcoa and Ramsay Health
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alcoa and Ramsay is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Inc 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 Alcoa 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 Alcoa Inc 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 Alcoa i.e., Alcoa and Ramsay Health go up and down completely randomly.
Pair Corralation between Alcoa and Ramsay Health
Assuming the 90 days trading horizon Alcoa Inc is expected to under-perform the Ramsay Health. In addition to that, Alcoa is 1.48 times more volatile than Ramsay Health Care. It trades about -0.03 of its total potential returns per unit of risk. Ramsay Health Care is currently generating about -0.02 per unit of volatility. If you would invest 3,842 in Ramsay Health Care on September 13, 2024 and sell it today you would lose (48.00) from holding Ramsay Health Care or give up 1.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Alcoa Inc vs. Ramsay Health Care
Performance |
| Timeline |
| Alcoa Inc |
| Ramsay Health Care |
Alcoa and Ramsay Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa and Ramsay Health
The main advantage of trading using opposite Alcoa and Ramsay Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa 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.| Alcoa vs. Autosports Group | Alcoa vs. BTC Health Limited | Alcoa vs. Computershare | Alcoa vs. Ainsworth Game Technology |
| Ramsay Health vs. Nufarm | Ramsay Health vs. Insignia Financial | Ramsay Health vs. Yowie Group | Ramsay Health vs. FleetPartners Group |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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