Correlation Between SunLink Health and Cumberland Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both SunLink Health and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals, you can compare the effects of market volatilities on SunLink Health and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunLink Health and Cumberland Pharmaceuticals.
Diversification Opportunities for SunLink Health and Cumberland Pharmaceuticals
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SunLink and Cumberland is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding SunLink Health Systems and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumberland Pharmaceuticals has no effect on the direction of SunLink Health i.e., SunLink Health and Cumberland Pharmaceuticals go up and down completely randomly.
Pair Corralation between SunLink Health and Cumberland Pharmaceuticals
Considering the 90-day investment horizon SunLink Health Systems is expected to under-perform the Cumberland Pharmaceuticals. In addition to that, SunLink Health is 1.78 times more volatile than Cumberland Pharmaceuticals. It trades about -0.21 of its total potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about -0.27 per unit of volatility. If you would invest 122.00 in Cumberland Pharmaceuticals on August 26, 2024 and sell it today you would lose (16.00) from holding Cumberland Pharmaceuticals or give up 13.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SunLink Health Systems vs. Cumberland Pharmaceuticals
Performance |
| Timeline |
| SunLink Health Systems |
| Cumberland Pharmaceuticals |
SunLink Health and Cumberland Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunLink Health and Cumberland Pharmaceuticals
The main advantage of trading using opposite SunLink Health and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunLink Health position performs unexpectedly, Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals will offset losses from the drop in Cumberland Pharmaceuticals' long position.The idea behind SunLink Health Systems and Cumberland Pharmaceuticals 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.| Cumberland Pharmaceuticals vs. Capricor Therapeutics | Cumberland Pharmaceuticals vs. Soleno Therapeutics | Cumberland Pharmaceuticals vs. Bio Path Holdings | Cumberland Pharmaceuticals vs. Moleculin Biotech |
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 Stocks Directory module to find actively traded stocks across global markets.
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