Correlation Between Ramsay Health and Lion One
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and Lion One 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 Lion One 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 Lion One Metals, you can compare the effects of market volatilities on Ramsay Health and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and Lion One.
Diversification Opportunities for Ramsay Health and Lion One
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ramsay and Lion is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Ramsay Health i.e., Ramsay Health and Lion One go up and down completely randomly.
Pair Corralation between Ramsay Health and Lion One
Assuming the 90 days horizon Ramsay Health Care is expected to generate 0.35 times more return on investment than Lion One. However, Ramsay Health Care is 2.83 times less risky than Lion One. It trades about -0.05 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.05 per unit of risk. If you would invest 3,296 in Ramsay Health Care on September 12, 2024 and sell it today you would lose (936.00) from holding Ramsay Health Care or give up 28.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ramsay Health Care vs. Lion One Metals
Performance |
| Timeline |
| Ramsay Health Care |
| Lion One Metals |
Ramsay Health and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and Lion One
The main advantage of trading using opposite Ramsay Health and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One'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 |
| Lion One vs. Franco Nevada | Lion One vs. Superior Plus Corp | Lion One vs. SIVERS SEMICONDUCTORS AB | Lion One vs. Norsk Hydro ASA |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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