Correlation Between International Business and Ramsay Health
Can any of the company-specific risk be diversified away by investing in both International Business 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 International Business and Ramsay Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and Ramsay Health Care, you can compare the effects of market volatilities on International Business 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 International Business with a short position of Ramsay Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Ramsay Health.
Diversification Opportunities for International Business and Ramsay Health
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between International and Ramsay is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine 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 International Business 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 International Business Machines 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 International Business i.e., International Business and Ramsay Health go up and down completely randomly.
Pair Corralation between International Business and Ramsay Health
Assuming the 90 days trading horizon International Business Machines is expected to generate 0.86 times more return on investment than Ramsay Health. However, International Business Machines is 1.16 times less risky than Ramsay Health. It trades about 0.32 of its potential returns per unit of risk. Ramsay Health Care is currently generating about -0.17 per unit of risk. If you would invest 19,636 in International Business Machines on September 20, 2024 and sell it today you would earn a total of 2,149 from holding International Business Machines or generate 10.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. Ramsay Health Care
Performance |
| Timeline |
| International Business |
| Ramsay Health Care |
International Business and Ramsay Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Ramsay Health
The main advantage of trading using opposite International Business and Ramsay Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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.| International Business vs. Apple Inc | International Business vs. Apple Inc | International Business vs. Apple Inc | International Business vs. Microsoft |
| Ramsay Health vs. Universal Health Services | Ramsay Health vs. Superior Plus Corp | Ramsay Health vs. SIVERS SEMICONDUCTORS AB | Ramsay Health vs. NorAm Drilling AS |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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