Correlation Between Ramsay Health and Chongqing Machinery
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and Chongqing Machinery 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 Chongqing Machinery 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 Chongqing Machinery Electric, you can compare the effects of market volatilities on Ramsay Health and Chongqing Machinery 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 Chongqing Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and Chongqing Machinery.
Diversification Opportunities for Ramsay Health and Chongqing Machinery
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ramsay and Chongqing is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Chongqing Machinery Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Machinery 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 Chongqing Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Machinery has no effect on the direction of Ramsay Health i.e., Ramsay Health and Chongqing Machinery go up and down completely randomly.
Pair Corralation between Ramsay Health and Chongqing Machinery
Assuming the 90 days horizon Ramsay Health Care is expected to under-perform the Chongqing Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Ramsay Health Care is 3.72 times less risky than Chongqing Machinery. The stock trades about -0.07 of its potential returns per unit of risk. The Chongqing Machinery Electric is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2.24 in Chongqing Machinery Electric on September 23, 2024 and sell it today you would earn a total of 5.66 from holding Chongqing Machinery Electric or generate 252.68% 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. Chongqing Machinery Electric
Performance |
| Timeline |
| Ramsay Health Care |
| Chongqing Machinery |
Ramsay Health and Chongqing Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and Chongqing Machinery
The main advantage of trading using opposite Ramsay Health and Chongqing Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, Chongqing Machinery 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 Chongqing Machinery will offset losses from the drop in Chongqing Machinery's long position.| Ramsay Health vs. KOOL2PLAY SA ZY | Ramsay Health vs. BANKINTER ADR 2007 | Ramsay Health vs. OAKTRSPECLENDNEW | Ramsay Health vs. The Hanover Insurance |
| Chongqing Machinery vs. Honeywell International | Chongqing Machinery vs. Schneider Electric SE | Chongqing Machinery vs. Illinois Tool Works | Chongqing Machinery vs. Eaton PLC |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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