Correlation Between Ramsay Health and Bluescope Steel
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and Bluescope Steel 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 Bluescope Steel 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 Bluescope Steel, you can compare the effects of market volatilities on Ramsay Health and Bluescope Steel 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 Bluescope Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and Bluescope Steel.
Diversification Opportunities for Ramsay Health and Bluescope Steel
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ramsay and Bluescope is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Bluescope Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluescope Steel 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 Bluescope Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluescope Steel has no effect on the direction of Ramsay Health i.e., Ramsay Health and Bluescope Steel go up and down completely randomly.
Pair Corralation between Ramsay Health and Bluescope Steel
Assuming the 90 days trading horizon Ramsay Health Care is expected to under-perform the Bluescope Steel. But the stock apears to be less risky and, when comparing its historical volatility, Ramsay Health Care is 1.02 times less risky than Bluescope Steel. The stock trades about -0.05 of its potential returns per unit of risk. The Bluescope Steel is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,920 in Bluescope Steel on September 2, 2024 and sell it today you would earn a total of 293.00 from holding Bluescope Steel or generate 15.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ramsay Health Care vs. Bluescope Steel
Performance |
| Timeline |
| Ramsay Health Care |
| Bluescope Steel |
Ramsay Health and Bluescope Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and Bluescope Steel
The main advantage of trading using opposite Ramsay Health and Bluescope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, Bluescope Steel 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 Bluescope Steel will offset losses from the drop in Bluescope Steel's long position.| Ramsay Health vs. Group 6 Metals | Ramsay Health vs. Stelar Metals | Ramsay Health vs. American West Metals | Ramsay Health vs. RLF AgTech |
| Bluescope Steel vs. Northern Star Resources | Bluescope Steel vs. Evolution Mining | Bluescope Steel vs. Sandfire Resources NL | Bluescope Steel vs. Aneka Tambang Tbk |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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