Correlation Between Ramsay Health and JD Health

Can any of the company-specific risk be diversified away by investing in both Ramsay Health and JD 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 JD 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 JD Health International, you can compare the effects of market volatilities on Ramsay Health and JD 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 JD Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and JD Health.

Diversification Opportunities for Ramsay Health and JD Health

-0.35

Correlation Coefficient

Ramsay Health  JD Health

Very good diversification

The 3 months correlation between Ramsay and JDHIF is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and JD Health International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Health International 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 JD Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Health International has no effect on the direction of Ramsay Health i.e., Ramsay Health and JD Health go up and down completely randomly.

Pair Corralation between Ramsay Health and JD Health

Assuming the 90 days horizon Ramsay Health Care is expected to under-perform the JD Health. In addition to that, Ramsay Health is 1.46 times more volatile than JD Health International. It trades about -0.1 of its total potential returns per unit of risk. JD Health International is currently generating about 0.13 per unit of volatility. If you would invest  313.00  in JD Health International on September 25, 2024 and sell it today you would earn a total of  52.00  from holding JD Health International or generate 16.61% 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.  JD Health International

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. In spite of fragile performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

JD Health International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JD Health International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, JD Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ramsay Health and JD Health

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

The idea behind Ramsay Health Care and JD Health International 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.