Correlation Between Ramsay Health and Macquarie Group

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

Diversification Opportunities for Ramsay Health and Macquarie Group

-0.38

Correlation Coefficient

Ramsay Health  Macquarie Group

Very good diversification

The 3 months correlation between Ramsay and Macquarie is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group 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 Macquarie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of Ramsay Health i.e., Ramsay Health and Macquarie Group go up and down completely randomly.

Pair Corralation between Ramsay Health and Macquarie Group

Assuming the 90 days trading horizon Ramsay Health Care is expected to under-perform the Macquarie Group. In addition to that, Ramsay Health is 7.82 times more volatile than Macquarie Group Ltd. It trades about -0.48 of its total potential returns per unit of risk. Macquarie Group Ltd is currently generating about 0.22 per unit of volatility. If you would invest  10,362  in Macquarie Group Ltd on October 8, 2024 and sell it today you would earn a total of  78.00  from holding Macquarie Group Ltd or generate 0.75% return on investment over 90 days.

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

Ramsay Health Care  vs.  Macquarie Group Ltd

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.

Macquarie Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Group Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Macquarie Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ramsay Health and Macquarie Group

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

The idea behind Ramsay Health Care and Macquarie Group Ltd 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.