Correlation Between Bisalloy Steel and Sonic Healthcare
Can any of the company-specific risk be diversified away by investing in both Bisalloy Steel and Sonic Healthcare 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 Bisalloy Steel and Sonic Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bisalloy Steel Group and Sonic Healthcare, you can compare the effects of market volatilities on Bisalloy Steel and Sonic Healthcare 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 Bisalloy Steel with a short position of Sonic Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bisalloy Steel and Sonic Healthcare.
Diversification Opportunities for Bisalloy Steel and Sonic Healthcare
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bisalloy and Sonic is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bisalloy Steel Group and Sonic Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Healthcare and Bisalloy Steel 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 Bisalloy Steel Group are associated (or correlated) with Sonic Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonic Healthcare has no effect on the direction of Bisalloy Steel i.e., Bisalloy Steel and Sonic Healthcare go up and down completely randomly.
Pair Corralation between Bisalloy Steel and Sonic Healthcare
Assuming the 90 days trading horizon Bisalloy Steel Group is expected to generate 2.49 times more return on investment than Sonic Healthcare. However, Bisalloy Steel is 2.49 times more volatile than Sonic Healthcare. It trades about 0.06 of its potential returns per unit of risk. Sonic Healthcare is currently generating about -0.04 per unit of risk. If you would invest 162.00 in Bisalloy Steel Group on January 11, 2025 and sell it today you would earn a total of 151.00 from holding Bisalloy Steel Group or generate 93.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bisalloy Steel Group vs. Sonic Healthcare
Performance |
| Timeline |
| Bisalloy Steel Group |
| Sonic Healthcare |
Bisalloy Steel and Sonic Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bisalloy Steel and Sonic Healthcare
The main advantage of trading using opposite Bisalloy Steel and Sonic Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bisalloy Steel position performs unexpectedly, Sonic Healthcare 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 Sonic Healthcare will offset losses from the drop in Sonic Healthcare's long position.| Bisalloy Steel vs. Argo Investments | Bisalloy Steel vs. FireFly Metals | Bisalloy Steel vs. Hammer Metals | Bisalloy Steel vs. Betmakers Technology Group |
| Sonic Healthcare vs. Prime Financial Group | Sonic Healthcare vs. K2 Asset Management | Sonic Healthcare vs. Commonwealth Bank of | Sonic Healthcare vs. Oceania Healthcare |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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