Correlation Between SunLink Health and Titan Machinery

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

Diversification Opportunities for SunLink Health and Titan Machinery

0.0

Correlation Coefficient

SunLink Health  Titan Machinery

Pay attention - limited upside

The 3 months correlation between SunLink and Titan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SunLink Health Systems and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery 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 Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of SunLink Health i.e., SunLink Health and Titan Machinery go up and down completely randomly.

Pair Corralation between SunLink Health and Titan Machinery

Considering the 90-day investment horizon SunLink Health is expected to generate 2.25 times less return on investment than Titan Machinery. In addition to that, SunLink Health is 1.53 times more volatile than Titan Machinery. It trades about 0.04 of its total potential returns per unit of risk. Titan Machinery is currently generating about 0.13 per unit of volatility. If you would invest  1,382  in Titan Machinery on December 28, 2024 and sell it today you would earn a total of  408.00  from holding Titan Machinery or generate 29.52% return on investment over 90 days.

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

SunLink Health Systems  vs.  Titan Machinery

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.

Titan Machinery

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Titan Machinery displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SunLink Health and Titan Machinery

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

The idea behind SunLink Health Systems and Titan Machinery 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.