Correlation Between China Resources and Sonic Healthcare
Can any of the company-specific risk be diversified away by investing in both China Resources 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 China Resources and Sonic Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Beer and Sonic Healthcare Limited, you can compare the effects of market volatilities on China Resources 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 China Resources with a short position of Sonic Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Sonic Healthcare.
Diversification Opportunities for China Resources and Sonic Healthcare
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Sonic is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Sonic Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Healthcare and China Resources 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 China Resources Beer 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 China Resources i.e., China Resources and Sonic Healthcare go up and down completely randomly.
Pair Corralation between China Resources and Sonic Healthcare
Assuming the 90 days horizon China Resources Beer is expected to generate 2.76 times more return on investment than Sonic Healthcare. However, China Resources is 2.76 times more volatile than Sonic Healthcare Limited. It trades about 0.06 of its potential returns per unit of risk. Sonic Healthcare Limited is currently generating about 0.08 per unit of risk. If you would invest 234.00 in China Resources Beer on November 3, 2024 and sell it today you would earn a total of 60.00 from holding China Resources Beer or generate 25.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. Sonic Healthcare Limited
Performance |
| Timeline |
| China Resources Beer |
| Sonic Healthcare |
China Resources and Sonic Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Sonic Healthcare
The main advantage of trading using opposite China Resources and Sonic Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources 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.| China Resources vs. Singapore Reinsurance | China Resources vs. Japan Post Insurance | China Resources vs. Ryanair Holdings plc | China Resources vs. Delta Air Lines |
| Sonic Healthcare vs. Benchmark Electronics | Sonic Healthcare vs. LG Electronics | Sonic Healthcare vs. Arrow Electronics | Sonic Healthcare vs. Samsung Electronics Co |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |