Correlation Between Ramsay Health and ACDC Metals
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and ACDC Metals 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 ACDC Metals 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 ACDC Metals, you can compare the effects of market volatilities on Ramsay Health and ACDC Metals 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 ACDC Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and ACDC Metals.
Diversification Opportunities for Ramsay Health and ACDC Metals
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ramsay and ACDC is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and ACDC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACDC Metals 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 ACDC Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACDC Metals has no effect on the direction of Ramsay Health i.e., Ramsay Health and ACDC Metals go up and down completely randomly.
Pair Corralation between Ramsay Health and ACDC Metals
Assuming the 90 days trading horizon Ramsay Health is expected to generate 6.35 times less return on investment than ACDC Metals. But when comparing it to its historical volatility, Ramsay Health Care is 23.51 times less risky than ACDC Metals. It trades about 0.41 of its potential returns per unit of risk. ACDC Metals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5.10 in ACDC Metals on October 9, 2024 and sell it today you would earn a total of 0.40 from holding ACDC Metals or generate 7.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ramsay Health Care vs. ACDC Metals
Performance |
| Timeline |
| Ramsay Health Care |
| ACDC Metals |
Ramsay Health and ACDC Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and ACDC Metals
The main advantage of trading using opposite Ramsay Health and ACDC Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, ACDC Metals 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 ACDC Metals will offset losses from the drop in ACDC Metals' long position.| Ramsay Health vs. Hutchison Telecommunications | Ramsay Health vs. Australian Unity Office | Ramsay Health vs. Platinum Asset Management | Ramsay Health vs. Legacy Iron Ore |
| ACDC Metals vs. National Australia Bank | ACDC Metals vs. Auctus Alternative Investments | ACDC Metals vs. Navigator Global Investments | ACDC Metals vs. Qbe Insurance Group |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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