Correlation Between Ramsay Health and WIMFARM SA

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

Diversification Opportunities for Ramsay Health and WIMFARM SA

-0.28

Correlation Coefficient

Ramsay Health  WIMFARM SA

Very good diversification

The 3 months correlation between Ramsay and WIMFARM is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and WIMFARM SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIMFARM SA EO 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 WIMFARM SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIMFARM SA EO has no effect on the direction of Ramsay Health i.e., Ramsay Health and WIMFARM SA go up and down completely randomly.

Pair Corralation between Ramsay Health and WIMFARM SA

Assuming the 90 days horizon Ramsay Health Care is expected to generate 0.43 times more return on investment than WIMFARM SA. However, Ramsay Health Care is 2.35 times less risky than WIMFARM SA. It trades about -0.07 of its potential returns per unit of risk. WIMFARM SA EO is currently generating about -0.07 per unit of risk. If you would invest  4,009  in Ramsay Health Care on December 2, 2024 and sell it today you would lose (1,969) from holding Ramsay Health Care or give up 49.11% of portfolio value over 90 days.

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

Ramsay Health Care  vs.  WIMFARM SA EO

Ramsay Health Care

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ramsay Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

WIMFARM SA EO

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WIMFARM SA EO are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WIMFARM SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ramsay Health and WIMFARM SA

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

The idea behind Ramsay Health Care and WIMFARM SA EO 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.