Correlation Between Sabra Health and MULTI CHEM

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

By analyzing existing cross correlation between Sabra Health Care and MULTI CHEM LTD, you can compare the effects of market volatilities on Sabra Health and MULTI CHEM 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 Sabra Health with a short position of MULTI CHEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and MULTI CHEM.

Diversification Opportunities for Sabra Health and MULTI CHEM

0.0

Correlation Coefficient

Sabra Health  MULTI CHEM

Pay attention - limited upside

The 3 months correlation between Sabra and MULTI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and MULTI CHEM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MULTI CHEM LTD and Sabra 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 Sabra Health Care are associated (or correlated) with MULTI CHEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MULTI CHEM LTD has no effect on the direction of Sabra Health i.e., Sabra Health and MULTI CHEM go up and down completely randomly.

Pair Corralation between Sabra Health and MULTI CHEM

If you would invest  1,610  in Sabra Health Care on October 22, 2024 and sell it today you would earn a total of  42.00  from holding Sabra Health Care or generate 2.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sabra Health Care  vs.  MULTI CHEM LTD

Sabra Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sabra Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sabra Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MULTI CHEM LTD

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days MULTI CHEM LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MULTI CHEM is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sabra Health and MULTI CHEM

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

The idea behind Sabra Health Care and MULTI CHEM LTD 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.