Correlation Between Ramsay Health and HF SINCLAIR

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

Diversification Opportunities for Ramsay Health and HF SINCLAIR

0.27

Correlation Coefficient

Ramsay Health  HF SINCLAIR

Modest diversification

The 3 months correlation between Ramsay and HL80 is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and HF SINCLAIR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF SINCLAIR P 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 HF SINCLAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF SINCLAIR P has no effect on the direction of Ramsay Health i.e., Ramsay Health and HF SINCLAIR go up and down completely randomly.

Pair Corralation between Ramsay Health and HF SINCLAIR

Assuming the 90 days horizon Ramsay Health Care is expected to generate 0.73 times more return on investment than HF SINCLAIR. However, Ramsay Health Care is 1.37 times less risky than HF SINCLAIR. It trades about 0.01 of its potential returns per unit of risk. HF SINCLAIR P is currently generating about -0.08 per unit of risk. If you would invest  2,420  in Ramsay Health Care on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Ramsay Health Care or generate 0.0% return on investment over 90 days.

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

Ramsay Health Care  vs.  HF SINCLAIR P

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 nearly stable basic indicators, Ramsay Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HF SINCLAIR P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HF SINCLAIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Ramsay Health and HF SINCLAIR

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

The idea behind Ramsay Health Care and HF SINCLAIR P 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.