Correlation Between Cardinal Health and SAMMON

Can any of the company-specific risk be diversified away by investing in both Cardinal Health and SAMMON 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 Cardinal Health and SAMMON into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cardinal Health and SAMMON 475 08 APR 32, you can compare the effects of market volatilities on Cardinal Health and SAMMON 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 Cardinal Health with a short position of SAMMON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and SAMMON.

Diversification Opportunities for Cardinal Health and SAMMON

0.13

Correlation Coefficient

Cardinal Health  SAMMON

Average diversification

The 3 months correlation between Cardinal and SAMMON is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and SAMMON 475 08 APR 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAMMON 475 08 and Cardinal 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 Cardinal Health are associated (or correlated) with SAMMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAMMON 475 08 has no effect on the direction of Cardinal Health i.e., Cardinal Health and SAMMON go up and down completely randomly.

Pair Corralation between Cardinal Health and SAMMON

Considering the 90-day investment horizon Cardinal Health is expected to generate 0.32 times more return on investment than SAMMON. However, Cardinal Health is 3.16 times less risky than SAMMON. It trades about 0.14 of its potential returns per unit of risk. SAMMON 475 08 APR 32 is currently generating about -0.08 per unit of risk. If you would invest  10,922  in Cardinal Health on October 24, 2024 and sell it today you would earn a total of  1,861  from holding Cardinal Health or generate 17.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	23.46%
Values	Daily Returns

Cardinal Health  vs.  SAMMON 475 08 APR 32

Cardinal Health

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Cardinal Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.

SAMMON 475 08

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAMMON 475 08 APR 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for SAMMON 475 08 APR 32 investors.

Pair Trading with Cardinal Health and SAMMON

The main advantage of trading using opposite Cardinal Health and SAMMON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, SAMMON 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 SAMMON will offset losses from the drop in SAMMON's long position.

The idea behind Cardinal Health and SAMMON 475 08 APR 32 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.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.