Correlation Between Rea and Ramsay Health
Can any of the company-specific risk be diversified away by investing in both Rea 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 Rea and Ramsay 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 Ramsay Health Care, you can compare the effects of market volatilities on Rea 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 Rea with a short position of Ramsay Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rea and Ramsay Health.
Diversification Opportunities for Rea and Ramsay Health
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rea and Ramsay is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Rea Group 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 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 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 Rea i.e., Rea and Ramsay Health go up and down completely randomly.
Pair Corralation between Rea and Ramsay Health
Assuming the 90 days trading horizon Rea Group is expected to generate 1.05 times more return on investment than Ramsay Health. However, Rea is 1.05 times more volatile than Ramsay Health Care. It trades about 0.12 of its potential returns per unit of risk. Ramsay Health Care is currently generating about -0.07 per unit of risk. If you would invest 10,751 in Rea Group on August 28, 2024 and sell it today you would earn a total of 14,086 from holding Rea Group or generate 131.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rea Group vs. Ramsay Health Care
Performance |
| Timeline |
| Rea Group |
| Ramsay Health Care |
Rea and Ramsay Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rea and Ramsay Health
The main advantage of trading using opposite Rea and Ramsay Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rea 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.| Rea vs. EVE Health Group | Rea vs. BTC Health Limited | Rea vs. Fisher Paykel Healthcare | Rea vs. Epsilon Healthcare |
| Ramsay Health vs. Inventis | Ramsay Health vs. PM Capital Global | Ramsay Health vs. Macquarie Group Ltd | Ramsay Health vs. Wam Leaders |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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