Correlation Between SunLink Health and CARPENTER

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

Diversification Opportunities for SunLink Health and CARPENTER

0.04

Correlation Coefficient

SunLink Health  CARPENTER

Significant diversification

The 3 months correlation between SunLink and CARPENTER is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SunLink Health Systems and CARPENTER TECHNOLOGY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARPENTER 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 CARPENTER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARPENTER TECHNOLOGY has no effect on the direction of SunLink Health i.e., SunLink Health and CARPENTER go up and down completely randomly.

Pair Corralation between SunLink Health and CARPENTER

Considering the 90-day investment horizon SunLink Health Systems is expected to generate 9.24 times more return on investment than CARPENTER. However, SunLink Health is 9.24 times more volatile than CARPENTER TECHNOLOGY P. It trades about 0.02 of its potential returns per unit of risk. CARPENTER TECHNOLOGY P is currently generating about -0.01 per unit of risk. If you would invest  75.00  in SunLink Health Systems on September 12, 2024 and sell it today you would earn a total of  0.00  from holding SunLink Health Systems or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

SunLink Health Systems  vs.  CARPENTER TECHNOLOGY P

SunLink Health Systems

Risk-Adjusted Performance

1 of 100

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 conflicting basic indicators, SunLink Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CARPENTER TECHNOLOGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARPENTER TECHNOLOGY P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CARPENTER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SunLink Health and CARPENTER

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

The idea behind SunLink Health Systems and CARPENTER TECHNOLOGY P 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.