Correlation Between SunLink Health and Si Bone

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

Diversification Opportunities for SunLink Health and Si Bone

-0.31

Correlation Coefficient

SunLink Health  Si Bone

Very good diversification

The 3 months correlation between SunLink and SIBN is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding SunLink Health Systems and Si Bone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Si Bone 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 Si Bone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Si Bone has no effect on the direction of SunLink Health i.e., SunLink Health and Si Bone go up and down completely randomly.

Pair Corralation between SunLink Health and Si Bone

Considering the 90-day investment horizon SunLink Health Systems is expected to generate 1.0 times more return on investment than Si Bone. However, SunLink Health is 1.0 times more volatile than Si Bone. It trades about -0.01 of its potential returns per unit of risk. Si Bone is currently generating about -0.07 per unit of risk. If you would invest  80.00  in SunLink Health Systems on August 30, 2024 and sell it today you would lose (5.00) from holding SunLink Health Systems or give up 6.25% of portfolio value over 90 days.

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

SunLink Health Systems  vs.  Si Bone

SunLink Health Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SunLink Health Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, SunLink Health is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Si Bone

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Si Bone has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with SunLink Health and Si Bone

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

The idea behind SunLink Health Systems and Si Bone 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.