Correlation Between Ramsay Health and Adidas AG
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and Adidas AG 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 Adidas AG 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 adidas AG, you can compare the effects of market volatilities on Ramsay Health and Adidas AG 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 Adidas AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and Adidas AG.
Diversification Opportunities for Ramsay Health and Adidas AG
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ramsay and Adidas is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and adidas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on adidas AG 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 Adidas AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of adidas AG has no effect on the direction of Ramsay Health i.e., Ramsay Health and Adidas AG go up and down completely randomly.
Pair Corralation between Ramsay Health and Adidas AG
Assuming the 90 days horizon Ramsay Health is expected to generate 1.74 times less return on investment than Adidas AG. But when comparing it to its historical volatility, Ramsay Health Care is 1.11 times less risky than Adidas AG. It trades about 0.1 of its potential returns per unit of risk. adidas AG is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 10,900 in adidas AG on September 5, 2024 and sell it today you would earn a total of 700.00 from holding adidas AG or generate 6.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ramsay Health Care vs. adidas AG
Performance |
| Timeline |
| Ramsay Health Care |
| adidas AG |
Ramsay Health and Adidas AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and Adidas AG
The main advantage of trading using opposite Ramsay Health and Adidas AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, Adidas AG 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 Adidas AG will offset losses from the drop in Adidas AG's long position.| Ramsay Health vs. Superior Plus Corp | Ramsay Health vs. NMI Holdings | Ramsay Health vs. Origin Agritech | Ramsay Health vs. SIVERS SEMICONDUCTORS AB |
| Adidas AG vs. National Health Investors | Adidas AG vs. Ramsay Health Care | Adidas AG vs. Tradeweb Markets | Adidas AG vs. SHIP HEALTHCARE HLDGINC |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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