Correlation Between PURETECH HEALTH and Ryman Healthcare

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

By analyzing existing cross correlation between PURETECH HEALTH PLC and Ryman Healthcare Limited, you can compare the effects of market volatilities on PURETECH HEALTH and Ryman Healthcare 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 PURETECH HEALTH with a short position of Ryman Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of PURETECH HEALTH and Ryman Healthcare.

Diversification Opportunities for PURETECH HEALTH and Ryman Healthcare

-0.42

Correlation Coefficient

PURETECH HEALTH  Ryman Healthcare

Very good diversification

The 3 months correlation between PURETECH and Ryman is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding PURETECH HEALTH PLC and Ryman Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryman Healthcare and PURETECH 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 PURETECH HEALTH PLC are associated (or correlated) with Ryman Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryman Healthcare has no effect on the direction of PURETECH HEALTH i.e., PURETECH HEALTH and Ryman Healthcare go up and down completely randomly.

Pair Corralation between PURETECH HEALTH and Ryman Healthcare

Assuming the 90 days horizon PURETECH HEALTH PLC is expected to generate 1.5 times more return on investment than Ryman Healthcare. However, PURETECH HEALTH is 1.5 times more volatile than Ryman Healthcare Limited. It trades about -0.01 of its potential returns per unit of risk. Ryman Healthcare Limited is currently generating about -0.06 per unit of risk. If you would invest  189.00  in PURETECH HEALTH PLC on October 6, 2024 and sell it today you would lose (7.00) from holding PURETECH HEALTH PLC or give up 3.7% of portfolio value over 90 days.

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

PURETECH HEALTH PLC  vs.  Ryman Healthcare Limited

PURETECH HEALTH PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PURETECH HEALTH PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PURETECH HEALTH may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ryman Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PURETECH HEALTH and Ryman Healthcare

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

The idea behind PURETECH HEALTH PLC and Ryman Healthcare Limited 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.