Correlation Between Global Health and Ramsay Health

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

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

Diversification Opportunities for Global Health and Ramsay Health

0.27

Correlation Coefficient

Global Health  Ramsay Health

Modest diversification

The 3 months correlation between Global and Ramsay is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Global Health 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 Global 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 Global Health 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 Global Health i.e., Global Health and Ramsay Health go up and down completely randomly.

Pair Corralation between Global Health and Ramsay Health

Assuming the 90 days trading horizon Global Health is expected to generate 15.14 times more return on investment than Ramsay Health. However, Global Health is 15.14 times more volatile than Ramsay Health Care. It trades about 0.05 of its potential returns per unit of risk. Ramsay Health Care is currently generating about 0.16 per unit of risk. If you would invest  13.00  in Global Health on September 13, 2024 and sell it today you would earn a total of  1.00  from holding Global Health or generate 7.69% return on investment over 90 days.

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

Global Health  vs.  Ramsay Health Care

Global Health

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Health are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, Global Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ramsay Health Care

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ramsay Health Care are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ramsay Health is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Health and Ramsay Health

The main advantage of trading using opposite Global Health and Ramsay Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Health 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 Global Health 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.