Correlation Between EMBARQ and SunLink Health

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

By analyzing existing cross correlation between EMBARQ P 7995 and SunLink Health Systems, you can compare the effects of market volatilities on EMBARQ and SunLink Health 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 EMBARQ with a short position of SunLink Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMBARQ and SunLink Health.

Diversification Opportunities for EMBARQ and SunLink Health

-0.2

Correlation Coefficient

EMBARQ  SunLink Health

Good diversification

The 3 months correlation between EMBARQ and SunLink is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding EMBARQ P 7995 and SunLink Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunLink Health Systems and EMBARQ 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 EMBARQ P 7995 are associated (or correlated) with SunLink Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunLink Health Systems has no effect on the direction of EMBARQ i.e., EMBARQ and SunLink Health go up and down completely randomly.

Pair Corralation between EMBARQ and SunLink Health

Assuming the 90 days trading horizon EMBARQ P 7995 is expected to generate 0.5 times more return on investment than SunLink Health. However, EMBARQ P 7995 is 2.02 times less risky than SunLink Health. It trades about 0.29 of its potential returns per unit of risk. SunLink Health Systems is currently generating about -0.02 per unit of risk. If you would invest  4,788  in EMBARQ P 7995 on September 17, 2024 and sell it today you would earn a total of  722.00  from holding EMBARQ P 7995 or generate 15.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

EMBARQ P 7995  vs.  SunLink Health Systems

EMBARQ P 7995

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMBARQ P 7995 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for EMBARQ P 7995 investors.

SunLink Health Systems

Risk-Adjusted Performance

2 of 100

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 January 2025.

Pair Trading with EMBARQ and SunLink Health

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

The idea behind EMBARQ P 7995 and SunLink Health Systems 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.