Correlation Between Ramsay Health and Regal Investment
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and Regal Investment 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 Regal Investment 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 Regal Investment, you can compare the effects of market volatilities on Ramsay Health and Regal Investment 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 Regal Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and Regal Investment.
Diversification Opportunities for Ramsay Health and Regal Investment
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ramsay and Regal is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Regal Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Investment 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 Regal Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Investment has no effect on the direction of Ramsay Health i.e., Ramsay Health and Regal Investment go up and down completely randomly.
Pair Corralation between Ramsay Health and Regal Investment
Assuming the 90 days trading horizon Ramsay Health Care is expected to generate 0.14 times more return on investment than Regal Investment. However, Ramsay Health Care is 7.13 times less risky than Regal Investment. It trades about -0.11 of its potential returns per unit of risk. Regal Investment is currently generating about -0.14 per unit of risk. If you would invest 10,597 in Ramsay Health Care on September 3, 2024 and sell it today you would lose (47.00) from holding Ramsay Health Care or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ramsay Health Care vs. Regal Investment
Performance |
| Timeline |
| Ramsay Health Care |
| Regal Investment |
Ramsay Health and Regal Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and Regal Investment
The main advantage of trading using opposite Ramsay Health and Regal Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, Regal Investment 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 Regal Investment will offset losses from the drop in Regal Investment's long position.| Ramsay Health vs. Argo Investments | Ramsay Health vs. Diversified United Investment | Ramsay Health vs. Energy Technologies Limited | Ramsay Health vs. Macquarie Technology Group |
| Regal Investment vs. Champion Iron | Regal Investment vs. iShares Global Healthcare | Regal Investment vs. Peel Mining | Regal Investment vs. Australian Dairy Farms |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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