Correlation Between SunLink Health and Bimi International

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

Diversification Opportunities for SunLink Health and Bimi International

0.63

Correlation Coefficient

SunLink Health  Bimi International

Poor diversification

The 3 months correlation between SunLink and Bimi is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding SunLink Health Systems and Bimi International Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bimi International 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 Bimi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bimi International has no effect on the direction of SunLink Health i.e., SunLink Health and Bimi International go up and down completely randomly.

Pair Corralation between SunLink Health and Bimi International

Considering the 90-day investment horizon SunLink Health Systems is expected to under-perform the Bimi International. But the stock apears to be less risky and, when comparing its historical volatility, SunLink Health Systems is 3.14 times less risky than Bimi International. The stock trades about -0.15 of its potential returns per unit of risk. The Bimi International Medical is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  135.00  in Bimi International Medical on February 6, 2024 and sell it today you would lose (25.00) from holding Bimi International Medical or give up 18.52% of portfolio value over 90 days.

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

SunLink Health Systems  vs.  Bimi International Medical

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 conflicting 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.

Bimi International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bimi International Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with SunLink Health and Bimi International

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

The idea behind SunLink Health Systems and Bimi International Medical 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.