Correlation Between Ramsay Health and Global Health
Can any of the company-specific risk be diversified away by investing in both Ramsay Health 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 Ramsay Health and Global Health 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 Global Health, you can compare the effects of market volatilities on Ramsay Health 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 Ramsay Health with a short position of Global Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and Global Health.
Diversification Opportunities for Ramsay Health and Global Health
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ramsay and Global is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Health 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 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 Ramsay Health i.e., Ramsay Health and Global Health go up and down completely randomly.
Pair Corralation between Ramsay Health and Global Health
Assuming the 90 days trading horizon Ramsay Health Care is expected to under-perform the Global Health. But the stock apears to be less risky and, when comparing its historical volatility, Ramsay Health Care is 1.33 times less risky than Global Health. The stock trades about -0.13 of its potential returns per unit of risk. The Global Health is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Global Health on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Global Health or generate 0.0% 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. Global Health
Performance |
| Timeline |
| Ramsay Health Care |
| Global Health |
Ramsay Health and Global Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and Global Health
The main advantage of trading using opposite Ramsay Health and Global Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health 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.| Ramsay Health vs. Aristocrat Leisure | Ramsay Health vs. Carawine Resources Limited | Ramsay Health vs. G8 Education | Ramsay Health vs. Black Rock Mining |
| Global Health vs. Westpac Banking | Global Health vs. Champion Iron | Global Health vs. Ridley | Global Health vs. Peel Mining |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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