Correlation Between Ramsay Health and Perpetual Equity

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

Diversification Opportunities for Ramsay Health and Perpetual Equity

0.82

Correlation Coefficient

Ramsay Health  Perpetual Equity

Very poor diversification

The 3 months correlation between Ramsay and Perpetual is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Perpetual Equity Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perpetual Equity Inv 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 Perpetual Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perpetual Equity Inv has no effect on the direction of Ramsay Health i.e., Ramsay Health and Perpetual Equity go up and down completely randomly.

Pair Corralation between Ramsay Health and Perpetual Equity

Assuming the 90 days trading horizon Ramsay Health Care is expected to generate 1.06 times more return on investment than Perpetual Equity. However, Ramsay Health is 1.06 times more volatile than Perpetual Equity Investment. It trades about 0.18 of its potential returns per unit of risk. Perpetual Equity Investment is currently generating about 0.12 per unit of risk. If you would invest  3,335  in Ramsay Health Care on April 25, 2025 and sell it today you would earn a total of  573.00  from holding Ramsay Health Care or generate 17.18% return on investment over 90 days.

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

Ramsay Health Care  vs.  Perpetual Equity Investment

Ramsay Health Care

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ramsay Health Care are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Ramsay Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Perpetual Equity Inv

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perpetual Equity Investment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Perpetual Equity may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Ramsay Health and Perpetual Equity

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

The idea behind Ramsay Health Care and Perpetual Equity Investment 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.