Correlation Between Sonida Senior and IHH Healthcare

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

By analyzing existing cross correlation between Sonida Senior Living and IHH Healthcare Berhad, you can compare the effects of market volatilities on Sonida Senior and IHH Healthcare 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 Sonida Senior with a short position of IHH Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and IHH Healthcare.

Diversification Opportunities for Sonida Senior and IHH Healthcare

0.0

Correlation Coefficient

Sonida Senior  IHH Healthcare

Pay attention - limited upside

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

Pair Corralation between Sonida Senior and IHH Healthcare

Given the investment horizon of 90 days Sonida Senior Living is expected to generate 3.01 times more return on investment than IHH Healthcare. However, Sonida Senior is 3.01 times more volatile than IHH Healthcare Berhad. It trades about 0.05 of its potential returns per unit of risk. IHH Healthcare Berhad is currently generating about -0.01 per unit of risk. If you would invest  1,332  in Sonida Senior Living on September 29, 2024 and sell it today you would earn a total of  959.00  from holding Sonida Senior Living or generate 72.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	68.48%
Values	Daily Returns

Sonida Senior Living  vs.  IHH Healthcare Berhad

Sonida Senior Living

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonida Senior Living has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

IHH Healthcare Berhad

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sonida Senior and IHH Healthcare

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

The idea behind Sonida Senior Living and IHH Healthcare Berhad 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.