Correlation Between SunLink Health and Codexis

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

Diversification Opportunities for SunLink Health and Codexis

-0.09

Correlation Coefficient

SunLink Health  Codexis

Good diversification

The 3 months correlation between SunLink and Codexis is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding SunLink Health Systems and Codexis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codexis 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 Codexis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Codexis has no effect on the direction of SunLink Health i.e., SunLink Health and Codexis go up and down completely randomly.

Pair Corralation between SunLink Health and Codexis

Considering the 90-day investment horizon SunLink Health Systems is expected to under-perform the Codexis. In addition to that, SunLink Health is 1.56 times more volatile than Codexis. It trades about -0.03 of its total potential returns per unit of risk. Codexis is currently generating about 0.21 per unit of volatility. If you would invest  401.00  in Codexis on September 7, 2024 and sell it today you would earn a total of  62.00  from holding Codexis or generate 15.46% return on investment over 90 days.

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

SunLink Health Systems  vs.  Codexis

SunLink Health Systems

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SunLink Health Systems are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, SunLink Health showed solid returns over the last few months and may actually be approaching a breakup point.

Codexis

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Codexis are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Codexis unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SunLink Health and Codexis

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

The idea behind SunLink Health Systems and Codexis 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.