Correlation Between Ramsay Health and Retail Food

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

Diversification Opportunities for Ramsay Health and Retail Food

-0.76

Correlation Coefficient

Ramsay Health  Retail Food

Pay attention - limited upside

The 3 months correlation between Ramsay and Retail is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Retail Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Food 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 Retail Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Food Group has no effect on the direction of Ramsay Health i.e., Ramsay Health and Retail Food go up and down completely randomly.

Pair Corralation between Ramsay Health and Retail Food

Assuming the 90 days trading horizon Ramsay Health Care is expected to under-perform the Retail Food. But the stock apears to be less risky and, when comparing its historical volatility, Ramsay Health Care is 1.68 times less risky than Retail Food. The stock trades about -0.1 of its potential returns per unit of risk. The Retail Food Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  276.00  in Retail Food Group on September 15, 2024 and sell it today you would earn a total of  12.00  from holding Retail Food Group or generate 4.35% return on investment over 90 days.

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

Ramsay Health Care  vs.  Retail Food Group

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 latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Retail Food Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Retail Food Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Retail Food 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 Ramsay Health and Retail Food

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

The idea behind Ramsay Health Care and Retail Food 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.

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.