Correlation Between Ramsay Health and Lifestance Health

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

Diversification Opportunities for Ramsay Health and Lifestance Health

-0.4

Correlation Coefficient

Ramsay Health  Lifestance Health

Very good diversification

The 3 months correlation between Ramsay and Lifestance is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Lifestance Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestance Health 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 Lifestance Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestance Health has no effect on the direction of Ramsay Health i.e., Ramsay Health and Lifestance Health go up and down completely randomly.

Pair Corralation between Ramsay Health and Lifestance Health

Assuming the 90 days horizon Ramsay Health Care is expected to generate 0.91 times more return on investment than Lifestance Health. However, Ramsay Health Care is 1.1 times less risky than Lifestance Health. It trades about -0.01 of its potential returns per unit of risk. Lifestance Health Group is currently generating about -0.08 per unit of risk. If you would invest  549.00  in Ramsay Health Care on December 30, 2024 and sell it today you would lose (11.00) from holding Ramsay Health Care or give up 2.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Ramsay Health Care  vs.  Lifestance Health Group

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.

Lifestance Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifestance Health Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Ramsay Health and Lifestance Health

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

The idea behind Ramsay Health Care and Lifestance Health Group 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.