Correlation Between Ramsay Health and BNK Banking
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and BNK Banking 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 BNK Banking 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 BNK Banking, you can compare the effects of market volatilities on Ramsay Health and BNK Banking 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 BNK Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and BNK Banking.
Diversification Opportunities for Ramsay Health and BNK Banking
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ramsay and BNK is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and BNK Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNK Banking 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 BNK Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNK Banking has no effect on the direction of Ramsay Health i.e., Ramsay Health and BNK Banking go up and down completely randomly.
Pair Corralation between Ramsay Health and BNK Banking
Assuming the 90 days trading horizon Ramsay Health Care is expected to generate 0.47 times more return on investment than BNK Banking. However, Ramsay Health Care is 2.11 times less risky than BNK Banking. It trades about -0.03 of its potential returns per unit of risk. BNK Banking is currently generating about -0.12 per unit of risk. If you would invest 3,440 in Ramsay Health Care on October 21, 2024 and sell it today you would lose (24.00) from holding Ramsay Health Care or give up 0.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ramsay Health Care vs. BNK Banking
Performance |
| Timeline |
| Ramsay Health Care |
| BNK Banking |
Ramsay Health and BNK Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and BNK Banking
The main advantage of trading using opposite Ramsay Health and BNK Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, BNK Banking 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 BNK Banking will offset losses from the drop in BNK Banking's long position.| Ramsay Health vs. Talisman Mining | Ramsay Health vs. EMvision Medical Devices | Ramsay Health vs. Kalgoorlie Gold Mining | Ramsay Health vs. 4Dmedical |
| BNK Banking vs. ABACUS STORAGE KING | BNK Banking vs. Advanced Braking Technology | BNK Banking vs. Ambertech | BNK Banking vs. Neurotech International |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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