Correlation Between Seven West and Ramsay Health

Can any of the company-specific risk be diversified away by investing in both Seven West and Ramsay 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 Seven West and Ramsay Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Seven West Media and Ramsay Health Care, you can compare the effects of market volatilities on Seven West and Ramsay 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 Seven West with a short position of Ramsay Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and Ramsay Health.

Diversification Opportunities for Seven West and Ramsay Health

0.47

Correlation Coefficient

Seven West  Ramsay Health

Very weak diversification

The 3 months correlation between Seven and Ramsay is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and Ramsay Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramsay Health Care and Seven West 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 Seven West Media are associated (or correlated) with Ramsay Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramsay Health Care has no effect on the direction of Seven West i.e., Seven West and Ramsay Health go up and down completely randomly.

Pair Corralation between Seven West and Ramsay Health

Assuming the 90 days trading horizon Seven West Media is expected to generate 16.3 times more return on investment than Ramsay Health. However, Seven West is 16.3 times more volatile than Ramsay Health Care. It trades about 0.07 of its potential returns per unit of risk. Ramsay Health Care is currently generating about 0.14 per unit of risk. If you would invest  14.00  in Seven West Media on December 27, 2024 and sell it today you would earn a total of  2.00  from holding Seven West Media or generate 14.29% return on investment over 90 days.

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

Seven West Media  vs.  Ramsay Health Care

Seven West Media

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Seven West Media are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Seven West unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ramsay Health Care

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ramsay Health Care are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ramsay Health is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Seven West and Ramsay Health

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

The idea behind Seven West Media and Ramsay Health Care 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.