Correlation Between SunLink Health and Micron Technology

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

Diversification Opportunities for SunLink Health and Micron Technology

0.37
  Correlation Coefficient

Weak diversification

The 3 months correlation between SunLink and Micron is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding SunLink Health Systems and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of SunLink Health i.e., SunLink Health and Micron Technology go up and down completely randomly.

Pair Corralation between SunLink Health and Micron Technology

Considering the 90-day investment horizon SunLink Health is expected to generate 2.03 times less return on investment than Micron Technology. In addition to that, SunLink Health is 1.46 times more volatile than Micron Technology. It trades about 0.03 of its total potential returns per unit of risk. Micron Technology is currently generating about 0.08 per unit of volatility. If you would invest  9,055  in Micron Technology on September 11, 2024 and sell it today you would earn a total of  1,227  from holding Micron Technology or generate 13.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

SunLink Health Systems  vs.  Micron Technology

 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.
Micron Technology 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

SunLink Health and Micron Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SunLink Health and Micron Technology

The main advantage of trading using opposite SunLink Health and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunLink Health position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.
The idea behind SunLink Health Systems and Micron Technology 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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