Correlation Between SunLink Health and NETGEAR

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

Diversification Opportunities for SunLink Health and NETGEAR

-0.28

Correlation Coefficient

SunLink Health  NETGEAR

Very good diversification

The 3 months correlation between SunLink and NETGEAR is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding SunLink Health Systems and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR 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 NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of SunLink Health i.e., SunLink Health and NETGEAR go up and down completely randomly.

Pair Corralation between SunLink Health and NETGEAR

Considering the 90-day investment horizon SunLink Health Systems is expected to generate 2.11 times more return on investment than NETGEAR. However, SunLink Health is 2.11 times more volatile than NETGEAR. It trades about 0.04 of its potential returns per unit of risk. NETGEAR is currently generating about -0.05 per unit of risk. If you would invest  102.00  in SunLink Health Systems on December 29, 2024 and sell it today you would earn a total of  4.00  from holding SunLink Health Systems or generate 3.92% return on investment over 90 days.

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

SunLink Health Systems  vs.  NETGEAR

SunLink Health Systems

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SunLink Health Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, SunLink Health showed solid returns over the last few months and may actually be approaching a breakup point.

NETGEAR

Risk-Adjusted Performance

Very Weak

Over the last 90 days NETGEAR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with SunLink Health and NETGEAR

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

The idea behind SunLink Health Systems and NETGEAR 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.