Correlation Between Sonida Senior and Eshallgo

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

Diversification Opportunities for Sonida Senior and Eshallgo

-0.44

Correlation Coefficient

Sonida Senior  Eshallgo

Very good diversification

The 3 months correlation between Sonida and Eshallgo is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Eshallgo Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eshallgo Class A 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 Eshallgo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eshallgo Class A has no effect on the direction of Sonida Senior i.e., Sonida Senior and Eshallgo go up and down completely randomly.

Pair Corralation between Sonida Senior and Eshallgo

Given the investment horizon of 90 days Sonida Senior Living is expected to generate 0.27 times more return on investment than Eshallgo. However, Sonida Senior Living is 3.7 times less risky than Eshallgo. It trades about 0.01 of its potential returns per unit of risk. Eshallgo Class A is currently generating about -0.17 per unit of risk. If you would invest  2,274  in Sonida Senior Living on December 28, 2024 and sell it today you would lose (4.00) from holding Sonida Senior Living or give up 0.18% of portfolio value over 90 days.

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

Sonida Senior Living  vs.  Eshallgo Class A

Sonida Senior Living

Risk-Adjusted Performance

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.

Eshallgo Class A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eshallgo Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Sonida Senior and Eshallgo

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

The idea behind Sonida Senior Living and Eshallgo Class A 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.