Correlation Between Sun Country and Huaizhong Health

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

By analyzing existing cross correlation between Sun Country Airlines and Huaizhong Health Group, you can compare the effects of market volatilities on Sun Country and Huaizhong 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 Sun Country with a short position of Huaizhong Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Huaizhong Health.

Diversification Opportunities for Sun Country and Huaizhong Health

0.0

Correlation Coefficient

Sun Country  Huaizhong Health

Pay attention - limited upside

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

Pair Corralation between Sun Country and Huaizhong Health

Given the investment horizon of 90 days Sun Country Airlines is expected to generate 0.6 times more return on investment than Huaizhong Health. However, Sun Country Airlines is 1.66 times less risky than Huaizhong Health. It trades about 0.01 of its potential returns per unit of risk. Huaizhong Health Group is currently generating about -0.03 per unit of risk. If you would invest  1,632  in Sun Country Airlines on September 12, 2024 and sell it today you would lose (119.00) from holding Sun Country Airlines or give up 7.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Sun Country Airlines  vs.  Huaizhong Health Group

Sun Country Airlines

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Country Airlines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Sun Country showed solid returns over the last few months and may actually be approaching a breakup point.

Huaizhong Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huaizhong Health Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Huaizhong Health is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sun Country and Huaizhong Health

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

The idea behind Sun Country Airlines and Huaizhong Health Group 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.

Check out your portfolio center.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.