Correlation Between Environmental and Sonic Healthcare
Can any of the company-specific risk be diversified away by investing in both Environmental 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 Environmental and Sonic Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Environmental Group and Sonic Healthcare, you can compare the effects of market volatilities on Environmental 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 Environmental with a short position of Sonic Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Environmental and Sonic Healthcare.
Diversification Opportunities for Environmental and Sonic Healthcare
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Environmental and Sonic is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding The Environmental Group and Sonic Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Healthcare and Environmental 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 The Environmental 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 Environmental i.e., Environmental and Sonic Healthcare go up and down completely randomly.
Pair Corralation between Environmental and Sonic Healthcare
Assuming the 90 days trading horizon The Environmental Group is expected to generate 2.11 times more return on investment than Sonic Healthcare. However, Environmental is 2.11 times more volatile than Sonic Healthcare. It trades about 0.04 of its potential returns per unit of risk. Sonic Healthcare is currently generating about -0.02 per unit of risk. If you would invest 24.00 in The Environmental Group on September 20, 2024 and sell it today you would earn a total of 5.00 from holding The Environmental Group or generate 20.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Environmental Group vs. Sonic Healthcare
Performance |
| Timeline |
| The Environmental |
| Sonic Healthcare |
Environmental and Sonic Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Environmental and Sonic Healthcare
The main advantage of trading using opposite Environmental and Sonic Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Environmental 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.| Environmental vs. Energy Resources | Environmental vs. 88 Energy | Environmental vs. Amani Gold | Environmental vs. A1 Investments Resources |
| Sonic Healthcare vs. The Environmental Group | Sonic Healthcare vs. Australian Unity Office | Sonic Healthcare vs. Iron Road | Sonic Healthcare vs. Phoslock Environmental Technologies |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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