Correlation Between Ramsay Health and Indiana Resources
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and Indiana Resources 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 Indiana Resources 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 Indiana Resources, you can compare the effects of market volatilities on Ramsay Health and Indiana Resources 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 Indiana Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and Indiana Resources.
Diversification Opportunities for Ramsay Health and Indiana Resources
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ramsay and Indiana is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Indiana Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indiana Resources 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 Indiana Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indiana Resources has no effect on the direction of Ramsay Health i.e., Ramsay Health and Indiana Resources go up and down completely randomly.
Pair Corralation between Ramsay Health and Indiana Resources
Assuming the 90 days trading horizon Ramsay Health Care is expected to under-perform the Indiana Resources. But the stock apears to be less risky and, when comparing its historical volatility, Ramsay Health Care is 1.79 times less risky than Indiana Resources. The stock trades about -0.04 of its potential returns per unit of risk. The Indiana Resources is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 6.20 in Indiana Resources on November 3, 2024 and sell it today you would earn a total of 0.90 from holding Indiana Resources or generate 14.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ramsay Health Care vs. Indiana Resources
Performance |
| Timeline |
| Ramsay Health Care |
| Indiana Resources |
Ramsay Health and Indiana Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and Indiana Resources
The main advantage of trading using opposite Ramsay Health and Indiana Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, Indiana Resources 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 Indiana Resources will offset losses from the drop in Indiana Resources' long position.| Ramsay Health vs. Step One Clothing | Ramsay Health vs. Autosports Group | Ramsay Health vs. Zoom2u Technologies | Ramsay Health vs. Charter Hall Education |
| Indiana Resources vs. Northern Star Resources | Indiana Resources vs. Evolution Mining | Indiana Resources vs. Bluescope Steel | Indiana Resources vs. De Grey 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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