Correlation Between Ramsay Health and Acadia Healthcare
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and Acadia Healthcare 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 Acadia Healthcare 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 Acadia Healthcare, you can compare the effects of market volatilities on Ramsay Health and Acadia Healthcare 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 Acadia Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and Acadia Healthcare.
Diversification Opportunities for Ramsay Health and Acadia Healthcare
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ramsay and Acadia is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Acadia Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Healthcare 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 Acadia Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Healthcare has no effect on the direction of Ramsay Health i.e., Ramsay Health and Acadia Healthcare go up and down completely randomly.
Pair Corralation between Ramsay Health and Acadia Healthcare
Assuming the 90 days horizon Ramsay Health Care is expected to under-perform the Acadia Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Ramsay Health Care is 2.19 times less risky than Acadia Healthcare. The stock trades about -0.15 of its potential returns per unit of risk. The Acadia Healthcare is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 3,640 in Acadia Healthcare on October 27, 2024 and sell it today you would earn a total of 600.00 from holding Acadia Healthcare or generate 16.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ramsay Health Care vs. Acadia Healthcare
Performance |
| Timeline |
| Ramsay Health Care |
| Acadia Healthcare |
Ramsay Health and Acadia Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and Acadia Healthcare
The main advantage of trading using opposite Ramsay Health and Acadia Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, Acadia Healthcare 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 Acadia Healthcare will offset losses from the drop in Acadia Healthcare's long position.| Ramsay Health vs. GREENX METALS LTD | Ramsay Health vs. MCEWEN MINING INC | Ramsay Health vs. Japan Asia Investment | Ramsay Health vs. FIRST SAVINGS FINL |
| Acadia Healthcare vs. CHRYSALIS INVESTMENTS LTD | Acadia Healthcare vs. Chuangs China Investments | Acadia Healthcare vs. SLR Investment Corp | Acadia Healthcare vs. ECHO INVESTMENT ZY |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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