Correlation Between Sonida Senior and Ardelyx

Can any of the company-specific risk be diversified away by investing in both Sonida Senior and Ardelyx 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 Ardelyx 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 Ardelyx, you can compare the effects of market volatilities on Sonida Senior and Ardelyx 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 Ardelyx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and Ardelyx.

Diversification Opportunities for Sonida Senior and Ardelyx

0.41

Correlation Coefficient

Sonida Senior  Ardelyx

Very weak diversification

The 3 months correlation between Sonida and Ardelyx is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Ardelyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardelyx 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 Ardelyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardelyx has no effect on the direction of Sonida Senior i.e., Sonida Senior and Ardelyx go up and down completely randomly.

Pair Corralation between Sonida Senior and Ardelyx

Given the investment horizon of 90 days Sonida Senior is expected to generate 8.04 times less return on investment than Ardelyx. But when comparing it to its historical volatility, Sonida Senior Living is 1.96 times less risky than Ardelyx. It trades about 0.02 of its potential returns per unit of risk. Ardelyx is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  482.00  in Ardelyx on December 20, 2024 and sell it today you would earn a total of  55.00  from holding Ardelyx or generate 11.41% return on investment over 90 days.

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

Sonida Senior Living  vs.  Ardelyx

Sonida Senior Living

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sonida Senior Living are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Ardelyx

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ardelyx are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Ardelyx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sonida Senior and Ardelyx

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

The idea behind Sonida Senior Living and Ardelyx 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.