Correlation Between Australian Unity and Ramsay Health
Can any of the company-specific risk be diversified away by investing in both Australian Unity 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 Australian Unity and Ramsay Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Unity Office and Ramsay Health Care, you can compare the effects of market volatilities on Australian Unity 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 Australian Unity with a short position of Ramsay Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Unity and Ramsay Health.
Diversification Opportunities for Australian Unity and Ramsay Health
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Australian and Ramsay is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Australian Unity Office 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 Australian Unity 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 Australian Unity Office 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 Australian Unity i.e., Australian Unity and Ramsay Health go up and down completely randomly.
Pair Corralation between Australian Unity and Ramsay Health
Assuming the 90 days trading horizon Australian Unity Office is expected to generate 0.38 times more return on investment than Ramsay Health. However, Australian Unity Office is 2.61 times less risky than Ramsay Health. It trades about 0.47 of its potential returns per unit of risk. Ramsay Health Care is currently generating about -0.34 per unit of risk. If you would invest 105.00 in Australian Unity Office on October 14, 2024 and sell it today you would earn a total of 5.00 from holding Australian Unity Office or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Unity Office vs. Ramsay Health Care
Performance |
| Timeline |
| Australian Unity Office |
| Ramsay Health Care |
Australian Unity and Ramsay Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Unity and Ramsay Health
The main advantage of trading using opposite Australian Unity and Ramsay Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Unity 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.| Australian Unity vs. Air New Zealand | Australian Unity vs. Microequities Asset Management | Australian Unity vs. Pinnacle Investment Management | Australian Unity vs. Viva Leisure |
| Ramsay Health vs. Iron Road | Ramsay Health vs. Bisalloy Steel Group | Ramsay Health vs. Champion Iron | Ramsay Health vs. Australian Unity Office |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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