Correlation Between Sabra Healthcare and Hf Foods

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

By analyzing existing cross correlation between Sabra Healthcare REIT and Hf Foods Group, you can compare the effects of market volatilities on Sabra Healthcare and Hf Foods 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 Healthcare with a short position of Hf Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Healthcare and Hf Foods.

Diversification Opportunities for Sabra Healthcare and Hf Foods

0.3

Correlation Coefficient

Sabra Healthcare  Hf Foods

Weak diversification

The 3 months correlation between Sabra and HFFG is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Healthcare REIT and Hf Foods Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hf Foods Group and Sabra Healthcare 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 Healthcare REIT are associated (or correlated) with Hf Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hf Foods Group has no effect on the direction of Sabra Healthcare i.e., Sabra Healthcare and Hf Foods go up and down completely randomly.

Pair Corralation between Sabra Healthcare and Hf Foods

Given the investment horizon of 90 days Sabra Healthcare REIT is expected to generate 0.31 times more return on investment than Hf Foods. However, Sabra Healthcare REIT is 3.19 times less risky than Hf Foods. It trades about 0.08 of its potential returns per unit of risk. Hf Foods Group is currently generating about -0.03 per unit of risk. If you would invest  1,643  in Sabra Healthcare REIT on December 19, 2024 and sell it today you would earn a total of  118.00  from holding Sabra Healthcare REIT or generate 7.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sabra Healthcare REIT  vs.  Hf Foods Group

Sabra Healthcare REIT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sabra Healthcare REIT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sabra Healthcare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Hf Foods Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hf Foods Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Sabra Healthcare and Hf Foods

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

The idea behind Sabra Healthcare REIT and Hf Foods Group 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.