Correlation Between Ramsay Health and Cleanaway Waste

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

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

Diversification Opportunities for Ramsay Health and Cleanaway Waste

0.8

Correlation Coefficient

Ramsay Health  Cleanaway Waste

Very poor diversification

The 3 months correlation between Ramsay and Cleanaway is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Cleanaway Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleanaway Waste Mana and Ramsay 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 Ramsay Health Care are associated (or correlated) with Cleanaway Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleanaway Waste Mana has no effect on the direction of Ramsay Health i.e., Ramsay Health and Cleanaway Waste go up and down completely randomly.

Pair Corralation between Ramsay Health and Cleanaway Waste

Assuming the 90 days trading horizon Ramsay Health Care is expected to under-perform the Cleanaway Waste. But the stock apears to be less risky and, when comparing its historical volatility, Ramsay Health Care is 1.02 times less risky than Cleanaway Waste. The stock trades about -0.08 of its potential returns per unit of risk. The Cleanaway Waste Management is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  251.00  in Cleanaway Waste Management on September 29, 2024 and sell it today you would earn a total of  18.00  from holding Cleanaway Waste Management or generate 7.17% return on investment over 90 days.

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

Ramsay Health Care  vs.  Cleanaway Waste Management

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cleanaway Waste Mana

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ramsay Health and Cleanaway Waste

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

The idea behind Ramsay Health Care and Cleanaway Waste Management 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.