Correlation Between Regis Healthcare and Transurban

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

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

Diversification Opportunities for Regis Healthcare and Transurban

-0.31

Correlation Coefficient

Regis Healthcare  Transurban

Very good diversification

The 3 months correlation between Regis and Transurban is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Regis Healthcare and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban Group and Regis Healthcare 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 Regis Healthcare are associated (or correlated) with Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of Regis Healthcare i.e., Regis Healthcare and Transurban go up and down completely randomly.

Pair Corralation between Regis Healthcare and Transurban

Assuming the 90 days trading horizon Regis Healthcare is expected to generate 1.7 times more return on investment than Transurban. However, Regis Healthcare is 1.7 times more volatile than Transurban Group. It trades about 0.11 of its potential returns per unit of risk. Transurban Group is currently generating about -0.02 per unit of risk. If you would invest  611.00  in Regis Healthcare on December 30, 2024 and sell it today you would earn a total of  77.00  from holding Regis Healthcare or generate 12.6% return on investment over 90 days.

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

Regis Healthcare  vs.  Transurban Group

Regis Healthcare

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Regis Healthcare are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Regis Healthcare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Transurban Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transurban Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Transurban 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 Regis Healthcare and Transurban

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

The idea behind Regis Healthcare and Transurban Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.