Correlation Between Sonida Senior and Freightos Limited

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

Diversification Opportunities for Sonida Senior and Freightos Limited

-0.36

Correlation Coefficient

Sonida Senior  Freightos Limited

Very good diversification

The 3 months correlation between Sonida and Freightos is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Freightos Limited Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freightos Limited 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 Freightos Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freightos Limited has no effect on the direction of Sonida Senior i.e., Sonida Senior and Freightos Limited go up and down completely randomly.

Pair Corralation between Sonida Senior and Freightos Limited

Given the investment horizon of 90 days Sonida Senior Living is expected to under-perform the Freightos Limited. But the stock apears to be less risky and, when comparing its historical volatility, Sonida Senior Living is 4.35 times less risky than Freightos Limited. The stock trades about -0.11 of its potential returns per unit of risk. The Freightos Limited Warrants is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Freightos Limited Warrants on October 8, 2024 and sell it today you would earn a total of  5.00  from holding Freightos Limited Warrants or generate 38.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	57.5%
Values	Daily Returns

Sonida Senior Living  vs.  Freightos Limited Warrants

Sonida Senior Living

Risk-Adjusted Performance

1 of 100

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.

Freightos Limited

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freightos Limited Warrants are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Freightos Limited showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sonida Senior and Freightos Limited

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

The idea behind Sonida Senior Living and Freightos Limited Warrants 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.