Correlation Between SunLink Health and Mativ Holdings

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

Diversification Opportunities for SunLink Health and Mativ Holdings

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between SunLink and Mativ is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SunLink Health Systems and Mativ Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mativ Holdings 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 Mativ Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mativ Holdings has no effect on the direction of SunLink Health i.e., SunLink Health and Mativ Holdings go up and down completely randomly.

Pair Corralation between SunLink Health and Mativ Holdings

Considering the 90-day investment horizon SunLink Health Systems is expected to generate 1.13 times more return on investment than Mativ Holdings. However, SunLink Health is 1.13 times more volatile than Mativ Holdings. It trades about 0.03 of its potential returns per unit of risk. Mativ Holdings is currently generating about -0.01 per unit of risk. If you would invest  70.00  in SunLink Health Systems on September 11, 2024 and sell it today you would earn a total of  6.93  from holding SunLink Health Systems or generate 9.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

SunLink Health Systems  vs.  Mativ Holdings

 Performance 
       Timeline  
SunLink Health Systems 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in SunLink Health Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, SunLink Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Mativ Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mativ Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

SunLink Health and Mativ Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SunLink Health and Mativ Holdings

The main advantage of trading using opposite SunLink Health and Mativ Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunLink Health position performs unexpectedly, Mativ Holdings 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 Mativ Holdings will offset losses from the drop in Mativ Holdings' long position.
The idea behind SunLink Health Systems and Mativ Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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