Correlation Between Ramsay Health and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and Chesapeake Utilities 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 Chesapeake Utilities 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 Chesapeake Utilities, you can compare the effects of market volatilities on Ramsay Health and Chesapeake Utilities 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and Chesapeake Utilities.
Diversification Opportunities for Ramsay Health and Chesapeake Utilities
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ramsay and Chesapeake is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of Ramsay Health i.e., Ramsay Health and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between Ramsay Health and Chesapeake Utilities
Assuming the 90 days horizon Ramsay Health Care is expected to under-perform the Chesapeake Utilities. In addition to that, Ramsay Health is 1.1 times more volatile than Chesapeake Utilities. It trades about -0.06 of its total potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.03 per unit of volatility. If you would invest 10,625 in Chesapeake Utilities on August 24, 2024 and sell it today you would earn a total of 1,475 from holding Chesapeake Utilities or generate 13.88% 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. Chesapeake Utilities
Performance |
| Timeline |
| Ramsay Health Care |
| Chesapeake Utilities |
Ramsay Health and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and Chesapeake Utilities
The main advantage of trading using opposite Ramsay Health and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| Ramsay Health vs. Superior Plus Corp | Ramsay Health vs. NMI Holdings | Ramsay Health vs. Origin Agritech | Ramsay Health vs. SIVERS SEMICONDUCTORS AB |
| Chesapeake Utilities vs. Snam SpA | Chesapeake Utilities vs. Superior Plus Corp | Chesapeake Utilities vs. NMI Holdings | Chesapeake Utilities vs. Origin Agritech |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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