Correlation Between Capitol Health and Sonic Healthcare
Can any of the company-specific risk be diversified away by investing in both Capitol Health 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 Capitol Health and Sonic Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitol Health and Sonic Healthcare, you can compare the effects of market volatilities on Capitol Health 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 Capitol Health with a short position of Sonic Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Health and Sonic Healthcare.
Diversification Opportunities for Capitol Health and Sonic Healthcare
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Capitol and Sonic is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Health and Sonic Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Healthcare and Capitol 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 Capitol Health 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 Capitol Health i.e., Capitol Health and Sonic Healthcare go up and down completely randomly.
Pair Corralation between Capitol Health and Sonic Healthcare
Assuming the 90 days trading horizon Capitol Health is expected to generate 1.98 times more return on investment than Sonic Healthcare. However, Capitol Health is 1.98 times more volatile than Sonic Healthcare. It trades about 0.03 of its potential returns per unit of risk. Sonic Healthcare is currently generating about 0.01 per unit of risk. If you would invest 29.00 in Capitol Health on September 5, 2024 and sell it today you would earn a total of 9.00 from holding Capitol Health or generate 31.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capitol Health vs. Sonic Healthcare
Performance |
| Timeline |
| Capitol Health |
| Sonic Healthcare |
Capitol Health and Sonic Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitol Health and Sonic Healthcare
The main advantage of trading using opposite Capitol Health and Sonic Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitol Health 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.| Capitol Health vs. Macquarie Group | Capitol Health vs. Macquarie Group Ltd | Capitol Health vs. Commonwealth Bank | Capitol Health vs. Rio Tinto |
| Sonic Healthcare vs. Macquarie Group | Sonic Healthcare vs. Macquarie Group Ltd | Sonic Healthcare vs. Commonwealth Bank | Sonic Healthcare vs. Rio Tinto |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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