Correlation Between Falcon Metals and Ramsay Health
Can any of the company-specific risk be diversified away by investing in both Falcon Metals 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 Falcon Metals and Ramsay Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Metals and Ramsay Health Care, you can compare the effects of market volatilities on Falcon Metals 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 Falcon Metals with a short position of Ramsay Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and Ramsay Health.
Diversification Opportunities for Falcon Metals and Ramsay Health
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Falcon and Ramsay is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals 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 Falcon Metals 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 Falcon Metals 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 Falcon Metals i.e., Falcon Metals and Ramsay Health go up and down completely randomly.
Pair Corralation between Falcon Metals and Ramsay Health
Assuming the 90 days trading horizon Falcon Metals is expected to generate 2.75 times more return on investment than Ramsay Health. However, Falcon Metals is 2.75 times more volatile than Ramsay Health Care. It trades about -0.02 of its potential returns per unit of risk. Ramsay Health Care is currently generating about -0.13 per unit of risk. If you would invest 14.00 in Falcon Metals on October 17, 2024 and sell it today you would lose (1.00) from holding Falcon Metals or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Metals vs. Ramsay Health Care
Performance |
| Timeline |
| Falcon Metals |
| Ramsay Health Care |
Falcon Metals and Ramsay Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Metals and Ramsay Health
The main advantage of trading using opposite Falcon Metals and Ramsay Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Metals 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.| Falcon Metals vs. Nufarm Finance NZ | Falcon Metals vs. Sky Metals | Falcon Metals vs. Hudson Investment Group | Falcon Metals vs. Perseus Mining |
| Ramsay Health vs. Mirrabooka Investments | Ramsay Health vs. Djerriwarrh Investments | Ramsay Health vs. Southern Cross Media | Ramsay Health vs. Regal Investment |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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