Correlation Between Ramsay Health and National Health
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and National Health 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 National Health 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 National Health Investors, you can compare the effects of market volatilities on Ramsay Health and National Health 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 National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and National Health.
Diversification Opportunities for Ramsay Health and National Health
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ramsay and National is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of Ramsay Health i.e., Ramsay Health and National Health go up and down completely randomly.
Pair Corralation between Ramsay Health and National Health
Assuming the 90 days horizon Ramsay Health Care is expected to under-perform the National Health. But the stock apears to be less risky and, when comparing its historical volatility, Ramsay Health Care is 1.15 times less risky than National Health. The stock trades about -0.08 of its potential returns per unit of risk. The National Health Investors is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7,063 in National Health Investors on August 28, 2024 and sell it today you would earn a total of 287.00 from holding National Health Investors or generate 4.06% 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. National Health Investors
Performance |
| Timeline |
| Ramsay Health Care |
| National Health Investors |
Ramsay Health and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and National Health
The main advantage of trading using opposite Ramsay Health and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, National Health 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 National Health will offset losses from the drop in National Health's long position.| Ramsay Health vs. Laureate Education | Ramsay Health vs. BLUESCOPE STEEL | Ramsay Health vs. BlueScope Steel Limited | Ramsay Health vs. IDP EDUCATION LTD |
| National Health vs. LG Display Co | National Health vs. Ming Le Sports | National Health vs. USWE SPORTS AB | National Health vs. Gamma Communications 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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