Correlation Between Ramsay Générale and Power Integrations

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

By analyzing existing cross correlation between Ramsay Gnrale de and Power Integrations, you can compare the effects of market volatilities on Ramsay Générale and Power Integrations 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 Générale with a short position of Power Integrations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Générale and Power Integrations.

Diversification Opportunities for Ramsay Générale and Power Integrations

-0.45

Correlation Coefficient

Ramsay Générale  Power Integrations

Very good diversification

The 3 months correlation between Ramsay and Power is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Gnrale de and Power Integrations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Integrations and Ramsay Générale 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 Gnrale de are associated (or correlated) with Power Integrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Integrations has no effect on the direction of Ramsay Générale i.e., Ramsay Générale and Power Integrations go up and down completely randomly.

Pair Corralation between Ramsay Générale and Power Integrations

Assuming the 90 days horizon Ramsay Générale is expected to generate 1.44 times less return on investment than Power Integrations. In addition to that, Ramsay Générale is 1.0 times more volatile than Power Integrations. It trades about 0.02 of its total potential returns per unit of risk. Power Integrations is currently generating about 0.03 per unit of volatility. If you would invest  5,681  in Power Integrations on October 8, 2024 and sell it today you would earn a total of  169.00  from holding Power Integrations or generate 2.97% return on investment over 90 days.

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

Ramsay Gnrale de  vs.  Power Integrations

Ramsay Gnrale de

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ramsay Gnrale de are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Ramsay Générale is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Power Integrations

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Power Integrations are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Power Integrations is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ramsay Générale and Power Integrations

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

The idea behind Ramsay Gnrale de and Power Integrations 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 Global Correlations module to find global opportunities by holding instruments from different markets.