Correlation Between Japan Medical and Sabra Health
Can any of the company-specific risk be diversified away by investing in both Japan Medical and Sabra 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 Japan Medical and Sabra Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Medical Dynamic and Sabra Health Care, you can compare the effects of market volatilities on Japan Medical and Sabra 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 Japan Medical with a short position of Sabra Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Medical and Sabra Health.
Diversification Opportunities for Japan Medical and Sabra Health
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Japan and Sabra is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Japan Medical Dynamic and Sabra Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabra Health Care and Japan Medical 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 Japan Medical Dynamic are associated (or correlated) with Sabra Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabra Health Care has no effect on the direction of Japan Medical i.e., Japan Medical and Sabra Health go up and down completely randomly.
Pair Corralation between Japan Medical and Sabra Health
Assuming the 90 days horizon Japan Medical Dynamic is expected to under-perform the Sabra Health. But the stock apears to be less risky and, when comparing its historical volatility, Japan Medical Dynamic is 1.04 times less risky than Sabra Health. The stock trades about -0.06 of its potential returns per unit of risk. The Sabra Health Care is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,652 in Sabra Health Care on October 14, 2024 and sell it today you would lose (2.00) from holding Sabra Health Care or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Medical Dynamic vs. Sabra Health Care
Performance |
| Timeline |
| Japan Medical Dynamic |
| Sabra Health Care |
Japan Medical and Sabra Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Medical and Sabra Health
The main advantage of trading using opposite Japan Medical and Sabra Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Medical position performs unexpectedly, Sabra 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 Sabra Health will offset losses from the drop in Sabra Health's long position.| Japan Medical vs. Fuji Media Holdings | Japan Medical vs. Westinghouse Air Brake | Japan Medical vs. Air New Zealand | Japan Medical vs. ANTA SPORTS PRODUCT |
| Sabra Health vs. Zoom Video Communications | Sabra Health vs. Commercial Vehicle Group | Sabra Health vs. SOCKET MOBILE NEW | Sabra Health vs. Shenandoah Telecommunications |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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