Correlation Between BGC and SunLink Health

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

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

Diversification Opportunities for BGC and SunLink Health

0.25

Correlation Coefficient

BGC  SunLink Health

Modest diversification

The 3 months correlation between BGC and SunLink is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding BGC Group and SunLink Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunLink Health Systems and BGC 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 BGC Group are associated (or correlated) with SunLink Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunLink Health Systems has no effect on the direction of BGC i.e., BGC and SunLink Health go up and down completely randomly.

Pair Corralation between BGC and SunLink Health

Considering the 90-day investment horizon BGC is expected to generate 16.36 times less return on investment than SunLink Health. But when comparing it to its historical volatility, BGC Group is 2.3 times less risky than SunLink Health. It trades about 0.02 of its potential returns per unit of risk. SunLink Health Systems is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  78.00  in SunLink Health Systems on May 4, 2025 and sell it today you would earn a total of  26.00  from holding SunLink Health Systems or generate 33.33% return on investment over 90 days.

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

BGC Group  vs.  SunLink Health Systems

BGC Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BGC Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, BGC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

SunLink Health Systems

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SunLink Health Systems are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, SunLink Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BGC and SunLink Health

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

The idea behind BGC Group and SunLink Health Systems 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.