Correlation Between FRESENIUS SECO and Ramsay Health

Can any of the company-specific risk be diversified away by investing in both FRESENIUS SECO and Ramsay 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 FRESENIUS SECO and Ramsay Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FRESENIUS SECO ADR and Ramsay Health Care, you can compare the effects of market volatilities on FRESENIUS SECO and Ramsay 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 FRESENIUS SECO with a short position of Ramsay Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of FRESENIUS SECO and Ramsay Health.

Diversification Opportunities for FRESENIUS SECO and Ramsay Health

0.17

Correlation Coefficient

FRESENIUS SECO  Ramsay Health

Average diversification

The 3 months correlation between FRESENIUS and Ramsay is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding FRESENIUS SECO ADR and Ramsay Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramsay Health Care and FRESENIUS SECO 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 FRESENIUS SECO ADR are associated (or correlated) with Ramsay Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramsay Health Care has no effect on the direction of FRESENIUS SECO i.e., FRESENIUS SECO and Ramsay Health go up and down completely randomly.

Pair Corralation between FRESENIUS SECO and Ramsay Health

Assuming the 90 days trading horizon FRESENIUS SECO ADR is expected to generate 1.11 times more return on investment than Ramsay Health. However, FRESENIUS SECO is 1.11 times more volatile than Ramsay Health Care. It trades about 0.0 of its potential returns per unit of risk. Ramsay Health Care is currently generating about -0.02 per unit of risk. If you would invest  835.00  in FRESENIUS SECO ADR on September 12, 2024 and sell it today you would lose (10.00) from holding FRESENIUS SECO ADR or give up 1.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

FRESENIUS SECO ADR  vs.  Ramsay Health Care

FRESENIUS SECO ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FRESENIUS SECO ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, FRESENIUS SECO is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ramsay Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ramsay Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ramsay Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FRESENIUS SECO and Ramsay Health

The main advantage of trading using opposite FRESENIUS SECO and Ramsay Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FRESENIUS SECO position performs unexpectedly, Ramsay 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 Ramsay Health will offset losses from the drop in Ramsay Health's long position.

The idea behind FRESENIUS SECO ADR and Ramsay Health Care pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.