Correlation Between Sabra Health and Data#3

Can any of the company-specific risk be diversified away by investing in both Sabra Health and Data#3 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 Sabra Health and Data#3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sabra Health Care and Data3 Limited, you can compare the effects of market volatilities on Sabra Health and Data#3 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 Sabra Health with a short position of Data#3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and Data#3.

Diversification Opportunities for Sabra Health and Data#3

0.38

Correlation Coefficient

Sabra Health  Data#3

Weak diversification

The 3 months correlation between Sabra and Data#3 is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and Data3 Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data3 Limited and Sabra 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 Sabra Health Care are associated (or correlated) with Data#3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data3 Limited has no effect on the direction of Sabra Health i.e., Sabra Health and Data#3 go up and down completely randomly.

Pair Corralation between Sabra Health and Data#3

Assuming the 90 days horizon Sabra Health Care is expected to generate 0.69 times more return on investment than Data#3. However, Sabra Health Care is 1.45 times less risky than Data#3. It trades about 0.07 of its potential returns per unit of risk. Data3 Limited is currently generating about 0.01 per unit of risk. If you would invest  975.00  in Sabra Health Care on September 24, 2024 and sell it today you would earn a total of  615.00  from holding Sabra Health Care or generate 63.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sabra Health Care  vs.  Data3 Limited

Sabra Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sabra Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sabra Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Data3 Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Data3 Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sabra Health and Data#3

The main advantage of trading using opposite Sabra Health and Data#3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, Data#3 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 Data#3 will offset losses from the drop in Data#3's long position.

The idea behind Sabra Health Care and Data3 Limited 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 Global Correlations module to find global opportunities by holding instruments from different markets.