Correlation Between SunLink Health and SunOpta

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

Diversification Opportunities for SunLink Health and SunOpta

-0.28

Correlation Coefficient

SunLink Health  SunOpta

Very good diversification

The 3 months correlation between SunLink and SunOpta is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding SunLink Health Systems and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta 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 SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of SunLink Health i.e., SunLink Health and SunOpta go up and down completely randomly.

Pair Corralation between SunLink Health and SunOpta

Considering the 90-day investment horizon SunLink Health Systems is expected to generate 1.08 times more return on investment than SunOpta. However, SunLink Health is 1.08 times more volatile than SunOpta. It trades about -0.1 of its potential returns per unit of risk. SunOpta is currently generating about -0.15 per unit of risk. If you would invest  77.00  in SunLink Health Systems on February 2, 2024 and sell it today you would lose (11.00) from holding SunLink Health Systems or give up 14.29% of portfolio value over 90 days.

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

SunLink Health Systems  vs.  SunOpta

SunLink Health Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SunLink Health Systems 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 strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

SunOpta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SunOpta has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, SunOpta is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SunLink Health and SunOpta

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

The idea behind SunLink Health Systems and SunOpta 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.