Correlation Between ResMed and Ansell

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

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

Diversification Opportunities for ResMed and Ansell

-0.38

Correlation Coefficient

ResMed  Ansell

Very good diversification

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

Pair Corralation between ResMed and Ansell

Considering the 90-day investment horizon ResMed Inc is expected to under-perform the Ansell. But the stock apears to be less risky and, when comparing its historical volatility, ResMed Inc is 1.0 times less risky than Ansell. The stock trades about 0.0 of its potential returns per unit of risk. The Ansell Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,844  in Ansell Limited on September 13, 2024 and sell it today you would earn a total of  236.00  from holding Ansell Limited or generate 12.8% return on investment over 90 days.

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

ResMed Inc  vs.  Ansell Limited

ResMed Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ResMed Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, ResMed is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Ansell Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ansell Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Ansell reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ResMed and Ansell

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

The idea behind ResMed Inc and Ansell Limited 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.