Correlation Between Lucid and SunLink Health
Can any of the company-specific risk be diversified away by investing in both Lucid and SunLink 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 Lucid and SunLink Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucid Group and SunLink Health Systems, you can compare the effects of market volatilities on Lucid and SunLink 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 Lucid with a short position of SunLink Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and SunLink Health.
Diversification Opportunities for Lucid and SunLink Health
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lucid and SunLink is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and SunLink Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunLink Health Systems and Lucid 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 Lucid Group are associated (or correlated) with SunLink Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunLink Health Systems has no effect on the direction of Lucid i.e., Lucid and SunLink Health go up and down completely randomly.
Pair Corralation between Lucid and SunLink Health
Given the investment horizon of 90 days Lucid is expected to generate 12.23 times less return on investment than SunLink Health. But when comparing it to its historical volatility, Lucid Group is 1.29 times less risky than SunLink Health. It trades about 0.01 of its potential returns per unit of risk. SunLink Health Systems is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 83.00 in SunLink Health Systems on September 2, 2024 and sell it today you would earn a total of 3.00 from holding SunLink Health Systems or generate 3.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucid Group vs. SunLink Health Systems
Performance |
| Timeline |
| Lucid Group |
| SunLink Health Systems |
Lucid and SunLink Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucid and SunLink Health
The main advantage of trading using opposite Lucid and SunLink Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucid position performs unexpectedly, SunLink 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 SunLink Health will offset losses from the drop in SunLink Health's long position.The idea behind Lucid Group and SunLink Health Systems 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.| SunLink Health vs. Humana Inc | SunLink Health vs. Cigna Corp | SunLink Health vs. Elevance Health | SunLink Health vs. Centene Corp |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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