Correlation Between Sonida Senior and Concord Medical
Can any of the company-specific risk be diversified away by investing in both Sonida Senior and Concord Medical 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 Sonida Senior and Concord Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonida Senior Living and Concord Medical Services, you can compare the effects of market volatilities on Sonida Senior and Concord Medical 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 Sonida Senior with a short position of Concord Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and Concord Medical.
Diversification Opportunities for Sonida Senior and Concord Medical
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sonida and Concord is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Concord Medical Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concord Medical Services and Sonida Senior 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 Sonida Senior Living are associated (or correlated) with Concord Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concord Medical Services has no effect on the direction of Sonida Senior i.e., Sonida Senior and Concord Medical go up and down completely randomly.
Pair Corralation between Sonida Senior and Concord Medical
Given the investment horizon of 90 days Sonida Senior Living is expected to generate 0.45 times more return on investment than Concord Medical. However, Sonida Senior Living is 2.2 times less risky than Concord Medical. It trades about -0.02 of its potential returns per unit of risk. Concord Medical Services is currently generating about -0.22 per unit of risk. If you would invest 2,672 in Sonida Senior Living on August 29, 2024 and sell it today you would lose (67.00) from holding Sonida Senior Living or give up 2.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonida Senior Living vs. Concord Medical Services
Performance |
| Timeline |
| Sonida Senior Living |
| Concord Medical Services |
Sonida Senior and Concord Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and Concord Medical
The main advantage of trading using opposite Sonida Senior and Concord Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior position performs unexpectedly, Concord Medical 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 Concord Medical will offset losses from the drop in Concord Medical's long position.The idea behind Sonida Senior Living and Concord Medical Services 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.| Concord Medical vs. Pennant Group | Concord Medical vs. Encompass Health Corp | Concord Medical vs. Enhabit | Concord Medical vs. National HealthCare |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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