Correlation Between Ramsay Health and CHAODA MODERN

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

Diversification Opportunities for Ramsay Health and CHAODA MODERN

0.65

Correlation Coefficient

Ramsay Health  CHAODA MODERN

Poor diversification

The 3 months correlation between Ramsay and CHAODA is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and CHAODA MODERN AGRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAODA MODERN AGRI 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 CHAODA MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAODA MODERN AGRI has no effect on the direction of Ramsay Health i.e., Ramsay Health and CHAODA MODERN go up and down completely randomly.

Pair Corralation between Ramsay Health and CHAODA MODERN

Assuming the 90 days horizon Ramsay Health Care is expected to generate 0.32 times more return on investment than CHAODA MODERN. However, Ramsay Health Care is 3.1 times less risky than CHAODA MODERN. It trades about -0.25 of its potential returns per unit of risk. CHAODA MODERN AGRI is currently generating about -0.16 per unit of risk. If you would invest  2,440  in Ramsay Health Care on September 30, 2024 and sell it today you would lose (400.00) from holding Ramsay Health Care or give up 16.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.56%
Values	Daily Returns

Ramsay Health Care  vs.  CHAODA MODERN AGRI

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CHAODA MODERN AGRI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHAODA MODERN AGRI 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 basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Ramsay Health and CHAODA MODERN

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

The idea behind Ramsay Health Care and CHAODA MODERN AGRI 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.