Correlation Between Aluminumof China and Sabra Health
Can any of the company-specific risk be diversified away by investing in both Aluminumof China 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 Aluminumof China and Sabra Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and Sabra Health Care, you can compare the effects of market volatilities on Aluminumof China 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 Aluminumof China with a short position of Sabra Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and Sabra Health.
Diversification Opportunities for Aluminumof China and Sabra Health
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aluminumof and Sabra is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of 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 Aluminumof China 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 Aluminum of 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 Aluminumof China i.e., Aluminumof China and Sabra Health go up and down completely randomly.
Pair Corralation between Aluminumof China and Sabra Health
Assuming the 90 days horizon Aluminum of is expected to generate 1.66 times more return on investment than Sabra Health. However, Aluminumof China is 1.66 times more volatile than Sabra Health Care. It trades about 0.29 of its potential returns per unit of risk. Sabra Health Care is currently generating about 0.09 per unit of risk. If you would invest 53.00 in Aluminum of on October 22, 2024 and sell it today you would earn a total of 8.00 from holding Aluminum of or generate 15.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Aluminum of vs. Sabra Health Care
Performance |
Timeline |
Aluminumof China |
Sabra Health Care |
Aluminumof China and Sabra Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aluminumof China and Sabra Health
The main advantage of trading using opposite Aluminumof China and Sabra Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China 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.Aluminumof China vs. INTERSHOP Communications Aktiengesellschaft | Aluminumof China vs. Luckin Coffee | Aluminumof China vs. Darden Restaurants | Aluminumof China vs. Highlight Communications AG |
Sabra Health vs. GREENX METALS LTD | Sabra Health vs. Plastic Omnium | Sabra Health vs. NEWELL RUBBERMAID | Sabra Health vs. Perseus Mining Limited |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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