Correlation Between Rea and Global Health
Can any of the company-specific risk be diversified away by investing in both Rea and Global 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 Rea and Global Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rea Group and Global Health, you can compare the effects of market volatilities on Rea and Global 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 Rea with a short position of Global Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rea and Global Health.
Diversification Opportunities for Rea and Global Health
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Rea and Global is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Rea Group and Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Health and Rea 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 Rea Group are associated (or correlated) with Global Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Health has no effect on the direction of Rea i.e., Rea and Global Health go up and down completely randomly.
Pair Corralation between Rea and Global Health
Assuming the 90 days trading horizon Rea Group is expected to generate 0.59 times more return on investment than Global Health. However, Rea Group is 1.69 times less risky than Global Health. It trades about 0.24 of its potential returns per unit of risk. Global Health is currently generating about 0.01 per unit of risk. If you would invest 23,199 in Rea Group on August 28, 2024 and sell it today you would earn a total of 1,638 from holding Rea Group or generate 7.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rea Group vs. Global Health
Performance |
| Timeline |
| Rea Group |
| Global Health |
Rea and Global Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rea and Global Health
The main advantage of trading using opposite Rea and Global Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rea position performs unexpectedly, Global 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 Global Health will offset losses from the drop in Global Health's long position.| Rea vs. EVE Health Group | Rea vs. BTC Health Limited | Rea vs. Fisher Paykel Healthcare | Rea vs. Epsilon Healthcare |
| Global Health vs. Ras Technology Holdings | Global Health vs. Ainsworth Game Technology | Global Health vs. Thorney Technologies | Global Health vs. ACDC Metals |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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