Correlation Between Sigma Healthcare and Resonance Health

Can any of the company-specific risk be diversified away by investing in both Sigma Healthcare and Resonance Health 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 Sigma Healthcare and Resonance Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sigma Healthcare and Resonance Health, you can compare the effects of market volatilities on Sigma Healthcare and Resonance Health 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 Sigma Healthcare with a short position of Resonance Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sigma Healthcare and Resonance Health.

Diversification Opportunities for Sigma Healthcare and Resonance Health

-0.13

Correlation Coefficient

Sigma Healthcare  Resonance Health

Good diversification

The 3 months correlation between Sigma and Resonance is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sigma Healthcare and Resonance Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resonance Health and Sigma Healthcare 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 Sigma Healthcare are associated (or correlated) with Resonance Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resonance Health has no effect on the direction of Sigma Healthcare i.e., Sigma Healthcare and Resonance Health go up and down completely randomly.

Pair Corralation between Sigma Healthcare and Resonance Health

Assuming the 90 days trading horizon Sigma Healthcare is expected to under-perform the Resonance Health. But the stock apears to be less risky and, when comparing its historical volatility, Sigma Healthcare is 2.61 times less risky than Resonance Health. The stock trades about -0.04 of its potential returns per unit of risk. The Resonance Health is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3.70  in Resonance Health on April 20, 2025 and sell it today you would earn a total of  0.50  from holding Resonance Health or generate 13.51% return on investment over 90 days.

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

Sigma Healthcare  vs.  Resonance Health

Sigma Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sigma Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Sigma Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Resonance Health

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Resonance Health are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Resonance Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sigma Healthcare and Resonance Health

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

The idea behind Sigma Healthcare and Resonance Health 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.