Correlation Between Ramsay Health and Select Medical
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and Select Medical 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 Select Medical 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 Select Medical Holdings, you can compare the effects of market volatilities on Ramsay Health and Select Medical 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 Select Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and Select Medical.
Diversification Opportunities for Ramsay Health and Select Medical
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ramsay and Select is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Select Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Medical Holdings 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 Select Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Medical Holdings has no effect on the direction of Ramsay Health i.e., Ramsay Health and Select Medical go up and down completely randomly.
Pair Corralation between Ramsay Health and Select Medical
Assuming the 90 days horizon Ramsay Health is expected to generate 15.94 times less return on investment than Select Medical. But when comparing it to its historical volatility, Ramsay Health Care is 1.56 times less risky than Select Medical. It trades about 0.01 of its potential returns per unit of risk. Select Medical Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,275 in Select Medical Holdings on September 4, 2024 and sell it today you would earn a total of 828.00 from holding Select Medical Holdings or generate 64.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 48.62% |
| Values | Daily Returns |
Ramsay Health Care vs. Select Medical Holdings
Performance |
| Timeline |
| Ramsay Health Care |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Select Medical Holdings |
Ramsay Health and Select Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and Select Medical
The main advantage of trading using opposite Ramsay Health and Select Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, Select Medical 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 Select Medical will offset losses from the drop in Select Medical's long position.| Ramsay Health vs. Fresenius SE Co | Ramsay Health vs. Life Healthcare Group | Ramsay Health vs. Select Medical Holdings | Ramsay Health vs. Ramsay Health Care |
| Select Medical vs. The Ensign Group | Select Medical vs. Encompass Health Corp | Select Medical vs. InnovAge Holding Corp | Select Medical vs. Enhabit |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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