Correlation Between Ramsay Health and Regional Health

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

Diversification Opportunities for Ramsay Health and Regional Health

0.31

Correlation Coefficient

Ramsay Health  Regional Health

Weak diversification

The 3 months correlation between Ramsay and Regional is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Regional Health Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Health Prop 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 Regional Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Health Prop has no effect on the direction of Ramsay Health i.e., Ramsay Health and Regional Health go up and down completely randomly.

Pair Corralation between Ramsay Health and Regional Health

Assuming the 90 days horizon Ramsay Health Care is expected to under-perform the Regional Health. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ramsay Health Care is 17.23 times less risky than Regional Health. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Regional Health Properties is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  153.00  in Regional Health Properties on December 30, 2024 and sell it today you would earn a total of  79.00  from holding Regional Health Properties or generate 51.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	39.68%
Values	Daily Returns

Ramsay Health Care  vs.  Regional Health Properties

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.

Regional Health Prop

Risk-Adjusted Performance

Good

Over the last 90 days Regional Health Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak technical indicators, Regional Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ramsay Health and Regional Health

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

The idea behind Ramsay Health Care and Regional Health Properties 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 Transaction History module to view history of all your transactions and understand their impact on performance.