Correlation Between SunLink Health and Alibaba Health

Can any of the company-specific risk be diversified away by investing in both SunLink Health and Alibaba 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 SunLink Health and Alibaba Health 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 Alibaba Health Information, you can compare the effects of market volatilities on SunLink Health and Alibaba 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 SunLink Health with a short position of Alibaba Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunLink Health and Alibaba Health.

Diversification Opportunities for SunLink Health and Alibaba Health

0.31

Correlation Coefficient

SunLink Health  Alibaba Health

Weak diversification

The 3 months correlation between SunLink and Alibaba is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding SunLink Health Systems and Alibaba Health Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Health Infor 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 Alibaba Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Health Infor has no effect on the direction of SunLink Health i.e., SunLink Health and Alibaba Health go up and down completely randomly.

Pair Corralation between SunLink Health and Alibaba Health

Considering the 90-day investment horizon SunLink Health is expected to generate 9.89 times less return on investment than Alibaba Health. But when comparing it to its historical volatility, SunLink Health Systems is 1.48 times less risky than Alibaba Health. It trades about 0.01 of its potential returns per unit of risk. Alibaba Health Information is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  752.00  in Alibaba Health Information on September 13, 2024 and sell it today you would earn a total of  205.00  from holding Alibaba Health Information or generate 27.26% return on investment over 90 days.

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

SunLink Health Systems  vs.  Alibaba Health Information

SunLink Health Systems

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SunLink Health Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, SunLink Health is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Alibaba Health Infor

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alibaba Health Information are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Alibaba Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SunLink Health and Alibaba Health

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

The idea behind SunLink Health Systems and Alibaba Health Information 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.