Correlation Between Ramsay Health and Fresenius

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

Diversification Opportunities for Ramsay Health and Fresenius

0.14

Correlation Coefficient

Ramsay Health  Fresenius

Average diversification

The 3 months correlation between Ramsay and Fresenius is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Fresenius SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius SE 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 Fresenius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius SE has no effect on the direction of Ramsay Health i.e., Ramsay Health and Fresenius go up and down completely randomly.

Pair Corralation between Ramsay Health and Fresenius

Assuming the 90 days horizon Ramsay Health Care is expected to under-perform the Fresenius. In addition to that, Ramsay Health is 1.05 times more volatile than Fresenius SE Co. It trades about -0.01 of its total potential returns per unit of risk. Fresenius SE Co is currently generating about 0.24 per unit of volatility. If you would invest  870.00  in Fresenius SE Co on December 30, 2024 and sell it today you would earn a total of  216.00  from holding Fresenius SE Co or generate 24.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Ramsay Health Care  vs.  Fresenius SE Co

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. In spite of fairly strong technical indicators, Ramsay Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fresenius SE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fresenius SE Co are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Fresenius showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ramsay Health and Fresenius

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

The idea behind Ramsay Health Care and Fresenius SE Co 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.