Correlation Between SunLink Health and Cool
Can any of the company-specific risk be diversified away by investing in both SunLink Health and Cool 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 SunLink Health and Cool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunLink Health Systems and Cool Company, you can compare the effects of market volatilities on SunLink Health and Cool 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 SunLink Health with a short position of Cool. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunLink Health and Cool.
Diversification Opportunities for SunLink Health and Cool
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SunLink and Cool is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding SunLink Health Systems and Cool Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cool Company and SunLink 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 SunLink Health Systems are associated (or correlated) with Cool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cool Company has no effect on the direction of SunLink Health i.e., SunLink Health and Cool go up and down completely randomly.
Pair Corralation between SunLink Health and Cool
Considering the 90-day investment horizon SunLink Health Systems is expected to generate 1.36 times more return on investment than Cool. However, SunLink Health is 1.36 times more volatile than Cool Company. It trades about -0.05 of its potential returns per unit of risk. Cool Company is currently generating about -0.47 per unit of risk. If you would invest 82.00 in SunLink Health Systems on September 14, 2024 and sell it today you would lose (6.00) from holding SunLink Health Systems or give up 7.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SunLink Health Systems vs. Cool Company
Performance |
| Timeline |
| SunLink Health Systems |
| Cool Company |
SunLink Health and Cool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunLink Health and Cool
The main advantage of trading using opposite SunLink Health and Cool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunLink Health position performs unexpectedly, Cool 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 Cool will offset losses from the drop in Cool's long position.| SunLink Health vs. ASGN Inc | SunLink Health vs. Kforce Inc | SunLink Health vs. Kelly Services A | SunLink Health vs. AMN Healthcare Services |
| Cool vs. Century Aluminum | Cool vs. Cedar Realty Trust | Cool vs. Coupang LLC | Cool vs. SunLink Health Systems |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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