Correlation Between Ramsay Health and Hexcel
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and Hexcel 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 Hexcel 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 Hexcel, you can compare the effects of market volatilities on Ramsay Health and Hexcel 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 Hexcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and Hexcel.
Diversification Opportunities for Ramsay Health and Hexcel
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ramsay and Hexcel is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Hexcel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexcel 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 Hexcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexcel has no effect on the direction of Ramsay Health i.e., Ramsay Health and Hexcel go up and down completely randomly.
Pair Corralation between Ramsay Health and Hexcel
Assuming the 90 days horizon Ramsay Health Care is expected to under-perform the Hexcel. But the stock apears to be less risky and, when comparing its historical volatility, Ramsay Health Care is 1.15 times less risky than Hexcel. The stock trades about -0.02 of its potential returns per unit of risk. The Hexcel is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,485 in Hexcel on September 12, 2024 and sell it today you would earn a total of 515.00 from holding Hexcel or generate 9.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Ramsay Health Care vs. Hexcel
Performance |
| Timeline |
| Ramsay Health Care |
| Hexcel |
Ramsay Health and Hexcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and Hexcel
The main advantage of trading using opposite Ramsay Health and Hexcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, Hexcel 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 Hexcel will offset losses from the drop in Hexcel's long position.| Ramsay Health vs. Universal Health Services | Ramsay Health vs. Superior Plus Corp | Ramsay Health vs. SIVERS SEMICONDUCTORS AB | Ramsay Health vs. NorAm Drilling AS |
| Hexcel vs. Verizon Communications | Hexcel vs. Iridium Communications | Hexcel vs. CHINA TELECOM H | Hexcel vs. Citic Telecom International |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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