Correlation Between MA Financial and Ramsay Health

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

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

Diversification Opportunities for MA Financial and Ramsay Health

0.58

Correlation Coefficient

MA Financial  Ramsay Health

Very weak diversification

The 3 months correlation between MAF and Ramsay is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding MA Financial Group 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 MA Financial 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 MA Financial Group 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 MA Financial i.e., MA Financial and Ramsay Health go up and down completely randomly.

Pair Corralation between MA Financial and Ramsay Health

Assuming the 90 days trading horizon MA Financial Group is expected to generate 1.45 times more return on investment than Ramsay Health. However, MA Financial is 1.45 times more volatile than Ramsay Health Care. It trades about 0.0 of its potential returns per unit of risk. Ramsay Health Care is currently generating about -0.26 per unit of risk. If you would invest  652.00  in MA Financial Group on October 24, 2024 and sell it today you would lose (6.00) from holding MA Financial Group or give up 0.92% of portfolio value over 90 days.

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

MA Financial Group  vs.  Ramsay Health Care

MA Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MA Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, MA Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the 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 uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with MA Financial and Ramsay Health

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

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.