Correlation Between Ramsay Health and Australian Unity
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and Australian Unity 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 Ramsay Health and Australian Unity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ramsay Health Care and Australian Unity Ltd, you can compare the effects of market volatilities on Ramsay Health and Australian Unity 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 Ramsay Health with a short position of Australian Unity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and Australian Unity.
Diversification Opportunities for Ramsay Health and Australian Unity
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ramsay and Australian is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Australian Unity Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Unity and Ramsay Health 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 Ramsay Health Care are associated (or correlated) with Australian Unity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Unity has no effect on the direction of Ramsay Health i.e., Ramsay Health and Australian Unity go up and down completely randomly.
Pair Corralation between Ramsay Health and Australian Unity
Assuming the 90 days trading horizon Ramsay Health Care is expected to under-perform the Australian Unity. In addition to that, Ramsay Health is 2.07 times more volatile than Australian Unity Ltd. It trades about -0.12 of its total potential returns per unit of risk. Australian Unity Ltd is currently generating about 0.14 per unit of volatility. If you would invest 7,261 in Australian Unity Ltd on September 15, 2024 and sell it today you would earn a total of 1,009 from holding Australian Unity Ltd or generate 13.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ramsay Health Care vs. Australian Unity Ltd
Performance |
| Timeline |
| Ramsay Health Care |
| Australian Unity |
Ramsay Health and Australian Unity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and Australian Unity
The main advantage of trading using opposite Ramsay Health and Australian Unity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, Australian Unity 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 Australian Unity will offset losses from the drop in Australian Unity's long position.| Ramsay Health vs. Land Homes Group | Ramsay Health vs. Green Technology Metals | Ramsay Health vs. Carnegie Clean Energy | Ramsay Health vs. Cleanaway Waste Management |
| Australian Unity vs. Oceania Healthcare | Australian Unity vs. My Foodie Box | Australian Unity vs. Ramsay Health Care | Australian Unity vs. Farm Pride Foods |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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