Correlation Between Charter Hall and Sonic Healthcare
Can any of the company-specific risk be diversified away by investing in both Charter Hall 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 Charter Hall and Sonic Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Hall Retail and Sonic Healthcare, you can compare the effects of market volatilities on Charter Hall 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 Charter Hall with a short position of Sonic Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and Sonic Healthcare.
Diversification Opportunities for Charter Hall and Sonic Healthcare
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Charter and Sonic is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Sonic Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Healthcare and Charter Hall 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 Charter Hall Retail 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 Charter Hall i.e., Charter Hall and Sonic Healthcare go up and down completely randomly.
Pair Corralation between Charter Hall and Sonic Healthcare
Assuming the 90 days trading horizon Charter Hall Retail is expected to under-perform the Sonic Healthcare. In addition to that, Charter Hall is 1.18 times more volatile than Sonic Healthcare. It trades about -0.13 of its total potential returns per unit of risk. Sonic Healthcare is currently generating about -0.06 per unit of volatility. If you would invest 2,857 in Sonic Healthcare on October 30, 2024 and sell it today you would lose (58.00) from holding Sonic Healthcare or give up 2.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Hall Retail vs. Sonic Healthcare
Performance |
| Timeline |
| Charter Hall Retail |
| Sonic Healthcare |
Charter Hall and Sonic Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Hall and Sonic Healthcare
The main advantage of trading using opposite Charter Hall and Sonic Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Hall 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.| Charter Hall vs. A1 Investments Resources | Charter Hall vs. Carlton Investments | Charter Hall vs. MetalsGrove Mining | Charter Hall vs. DY6 Metals |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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