Correlation Between Sabra Health and QINGCI GAMES

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

Diversification Opportunities for Sabra Health and QINGCI GAMES

-0.37

Correlation Coefficient

Sabra Health  QINGCI GAMES

Very good diversification

The 3 months correlation between Sabra and QINGCI is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and QINGCI GAMES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QINGCI GAMES INC 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 QINGCI GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QINGCI GAMES INC has no effect on the direction of Sabra Health i.e., Sabra Health and QINGCI GAMES go up and down completely randomly.

Pair Corralation between Sabra Health and QINGCI GAMES

Assuming the 90 days horizon Sabra Health Care is expected to generate 0.6 times more return on investment than QINGCI GAMES. However, Sabra Health Care is 1.67 times less risky than QINGCI GAMES. It trades about 0.16 of its potential returns per unit of risk. QINGCI GAMES INC is currently generating about -0.02 per unit of risk. If you would invest  1,502  in Sabra Health Care on September 1, 2024 and sell it today you would earn a total of  286.00  from holding Sabra Health Care or generate 19.04% return on investment over 90 days.

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

Sabra Health Care  vs.  QINGCI GAMES INC

Sabra Health Care

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sabra Health Care are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Sabra Health reported solid returns over the last few months and may actually be approaching a breakup point.

QINGCI GAMES INC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sabra Health and QINGCI GAMES

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

The idea behind Sabra Health Care and QINGCI GAMES 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.