Correlation Between SunLink Health and Goldenstone Acquisition

Can any of the company-specific risk be diversified away by investing in both SunLink Health and Goldenstone Acquisition 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 SunLink Health and Goldenstone Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SunLink Health Systems and Goldenstone Acquisition Limited, you can compare the effects of market volatilities on SunLink Health and Goldenstone Acquisition 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 SunLink Health with a short position of Goldenstone Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunLink Health and Goldenstone Acquisition.

Diversification Opportunities for SunLink Health and Goldenstone Acquisition

0.41

Correlation Coefficient

SunLink Health  Goldenstone Acquisition

Very weak diversification

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

Pair Corralation between SunLink Health and Goldenstone Acquisition

Considering the 90-day investment horizon SunLink Health is expected to generate 65.6 times less return on investment than Goldenstone Acquisition. But when comparing it to its historical volatility, SunLink Health Systems is 9.32 times less risky than Goldenstone Acquisition. It trades about 0.03 of its potential returns per unit of risk. Goldenstone Acquisition Limited is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  4.30  in Goldenstone Acquisition Limited on December 30, 2024 and sell it today you would earn a total of  3.70  from holding Goldenstone Acquisition Limited or generate 86.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	74.19%
Values	Daily Returns

SunLink Health Systems  vs.  Goldenstone Acquisition Limite

SunLink Health Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SunLink Health Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, SunLink Health may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Goldenstone Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldenstone Acquisition Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Goldenstone Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SunLink Health and Goldenstone Acquisition

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

The idea behind SunLink Health Systems and Goldenstone Acquisition Limited 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.