Correlation Between SunLink Health and Tesla

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

Diversification Opportunities for SunLink Health and Tesla

-0.28

Correlation Coefficient

SunLink Health  Tesla

Very good diversification

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

Pair Corralation between SunLink Health and Tesla

Considering the 90-day investment horizon SunLink Health is expected to generate 28.52 times less return on investment than Tesla. But when comparing it to its historical volatility, SunLink Health Systems is 1.02 times less risky than Tesla. It trades about 0.01 of its potential returns per unit of risk. Tesla Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  22,678  in Tesla Inc on September 15, 2024 and sell it today you would earn a total of  20,945  from holding Tesla Inc or generate 92.36% 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.  Tesla Inc

SunLink Health Systems

Risk-Adjusted Performance

0 of 100

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Tesla Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal essential indicators, Tesla sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SunLink Health and Tesla

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

The idea behind SunLink Health Systems and Tesla Inc 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.