Correlation Between Sonida Senior and ZenaTech

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

Diversification Opportunities for Sonida Senior and ZenaTech

-0.34

Correlation Coefficient

Sonida Senior  ZenaTech

Very good diversification

The 3 months correlation between Sonida and ZenaTech is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and ZenaTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZenaTech 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 ZenaTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZenaTech has no effect on the direction of Sonida Senior i.e., Sonida Senior and ZenaTech go up and down completely randomly.

Pair Corralation between Sonida Senior and ZenaTech

Given the investment horizon of 90 days Sonida Senior is expected to generate 4.35 times less return on investment than ZenaTech. But when comparing it to its historical volatility, Sonida Senior Living is 6.39 times less risky than ZenaTech. It trades about 0.1 of its potential returns per unit of risk. ZenaTech is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  880.00  in ZenaTech on October 24, 2024 and sell it today you would lose (272.00) from holding ZenaTech or give up 30.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	31.17%
Values	Daily Returns

Sonida Senior Living  vs.  ZenaTech

Sonida Senior Living

Risk-Adjusted Performance

0 of 100

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.

ZenaTech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZenaTech are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ZenaTech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sonida Senior and ZenaTech

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

The idea behind Sonida Senior Living and ZenaTech 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.