Correlation Between Ramsay Health and Microsoft
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and Microsoft 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 Microsoft 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 Microsoft, you can compare the effects of market volatilities on Ramsay Health and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and Microsoft.
Diversification Opportunities for Ramsay Health and Microsoft
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ramsay and Microsoft is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Ramsay Health i.e., Ramsay Health and Microsoft go up and down completely randomly.
Pair Corralation between Ramsay Health and Microsoft
Assuming the 90 days horizon Ramsay Health Care is expected to under-perform the Microsoft. In addition to that, Ramsay Health is 1.18 times more volatile than Microsoft. It trades about -0.14 of its total potential returns per unit of risk. Microsoft is currently generating about 0.03 per unit of volatility. If you would invest 41,888 in Microsoft on September 19, 2024 and sell it today you would earn a total of 1,392 from holding Microsoft or generate 3.32% 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. Microsoft
Performance |
| Timeline |
| Ramsay Health Care |
| Microsoft |
Ramsay Health and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and Microsoft
The main advantage of trading using opposite Ramsay Health and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft'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 |
| Microsoft vs. NAKED WINES PLC | Microsoft vs. AGRICULTBK HADR25 YC | Microsoft vs. CVS Health | Microsoft vs. Ramsay Health Care |
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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