Correlation Between Sonida Senior and American Shared

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

By analyzing existing cross correlation between Sonida Senior Living and American Shared Hospital, you can compare the effects of market volatilities on Sonida Senior and American Shared 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 Sonida Senior with a short position of American Shared. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and American Shared.

Diversification Opportunities for Sonida Senior and American Shared

-0.01

Correlation Coefficient

Sonida Senior  American Shared

Good diversification

The 3 months correlation between Sonida and American is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and American Shared Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Shared Hospital and Sonida Senior 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 Sonida Senior Living are associated (or correlated) with American Shared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Shared Hospital has no effect on the direction of Sonida Senior i.e., Sonida Senior and American Shared go up and down completely randomly.

Pair Corralation between Sonida Senior and American Shared

Given the investment horizon of 90 days Sonida Senior Living is expected to generate 1.0 times more return on investment than American Shared. However, Sonida Senior Living is 1.0 times less risky than American Shared. It trades about -0.03 of its potential returns per unit of risk. American Shared Hospital is currently generating about -0.05 per unit of risk. If you would invest  2,562  in Sonida Senior Living on December 1, 2024 and sell it today you would lose (132.00) from holding Sonida Senior Living or give up 5.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sonida Senior Living  vs.  American Shared Hospital

Sonida Senior Living

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sonida Senior Living has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Sonida Senior is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American Shared Hospital

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Shared Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Sonida Senior and American Shared

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

The idea behind Sonida Senior Living and American Shared Hospital 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 CEOs Directory module to screen CEOs from public companies around the world.