Correlation Between Cardinal Health and Ramsay Health

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

Diversification Opportunities for Cardinal Health and Ramsay Health

0.16

Correlation Coefficient

Cardinal Health  Ramsay Health

Average diversification

The 3 months correlation between Cardinal and Ramsay is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal 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 Cardinal 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 Cardinal 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 Cardinal Health i.e., Cardinal Health and Ramsay Health go up and down completely randomly.

Pair Corralation between Cardinal Health and Ramsay Health

Assuming the 90 days horizon Cardinal Health is expected to generate 0.78 times more return on investment than Ramsay Health. However, Cardinal Health is 1.29 times less risky than Ramsay Health. It trades about 0.1 of its potential returns per unit of risk. Ramsay Health Care is currently generating about -0.02 per unit of risk. If you would invest  11,315  in Cardinal Health on December 28, 2024 and sell it today you would earn a total of  940.00  from holding Cardinal Health or generate 8.31% return on investment over 90 days.

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

Cardinal Health  vs.  Ramsay Health Care

Cardinal Health

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cardinal Health may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ramsay Health Care

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Cardinal Health and Ramsay Health

The main advantage of trading using opposite Cardinal Health and Ramsay Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal 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 Cardinal 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.