Correlation Between Aneka Tambang and Ramsay Health

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

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

Diversification Opportunities for Aneka Tambang and Ramsay Health

0.44

Correlation Coefficient

Aneka Tambang  Ramsay Health

Very weak diversification

The 3 months correlation between Aneka and Ramsay is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk 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 Aneka Tambang 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 Aneka Tambang Tbk 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 Aneka Tambang i.e., Aneka Tambang and Ramsay Health go up and down completely randomly.

Pair Corralation between Aneka Tambang and Ramsay Health

Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to under-perform the Ramsay Health. In addition to that, Aneka Tambang is 1.75 times more volatile than Ramsay Health Care. It trades about -0.08 of its total potential returns per unit of risk. Ramsay Health Care is currently generating about -0.01 per unit of volatility. If you would invest  3,999  in Ramsay Health Care on August 31, 2024 and sell it today you would lose (59.00) from holding Ramsay Health Care or give up 1.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Aneka Tambang Tbk  vs.  Ramsay Health Care

Aneka Tambang Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aneka Tambang Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 comparatively stable fundamental indicators, Ramsay Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aneka Tambang and Ramsay Health

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