Correlation Between SunLink Health and Air Lease

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

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

Diversification Opportunities for SunLink Health and Air Lease

-0.45

Correlation Coefficient

SunLink Health  Air Lease

Very good diversification

The 3 months correlation between SunLink and Air is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding SunLink Health Systems and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and SunLink 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 SunLink Health Systems are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of SunLink Health i.e., SunLink Health and Air Lease go up and down completely randomly.

Pair Corralation between SunLink Health and Air Lease

Considering the 90-day investment horizon SunLink Health Systems is expected to under-perform the Air Lease. In addition to that, SunLink Health is 2.72 times more volatile than Air Lease. It trades about -0.01 of its total potential returns per unit of risk. Air Lease is currently generating about 0.09 per unit of volatility. If you would invest  4,480  in Air Lease on September 25, 2024 and sell it today you would earn a total of  381.00  from holding Air Lease or generate 8.5% return on investment over 90 days.

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

SunLink Health Systems  vs.  Air Lease

SunLink Health Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SunLink Health Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, SunLink Health is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Air Lease

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, Air Lease may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SunLink Health and Air Lease

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

The idea behind SunLink Health Systems and Air Lease 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.