Correlation Between Ramsay Health and WashTec AG

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

Diversification Opportunities for Ramsay Health and WashTec AG

-0.58

Correlation Coefficient

Ramsay Health  WashTec AG

Excellent diversification

The 3 months correlation between Ramsay and WashTec is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and WashTec AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WashTec AG 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 WashTec AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WashTec AG has no effect on the direction of Ramsay Health i.e., Ramsay Health and WashTec AG go up and down completely randomly.

Pair Corralation between Ramsay Health and WashTec AG

Assuming the 90 days horizon Ramsay Health Care is expected to under-perform the WashTec AG. In addition to that, Ramsay Health is 1.1 times more volatile than WashTec AG. It trades about -0.1 of its total potential returns per unit of risk. WashTec AG is currently generating about 0.27 per unit of volatility. If you would invest  317.00  in WashTec AG on September 24, 2024 and sell it today you would earn a total of  181.00  from holding WashTec AG or generate 57.1% 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.  WashTec AG

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.

WashTec AG

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WashTec AG are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, WashTec AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ramsay Health and WashTec AG

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

The idea behind Ramsay Health Care and WashTec AG 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.