Correlation Between Garofalo Health and Sonic Healthcare
Can any of the company-specific risk be diversified away by investing in both Garofalo 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 Garofalo 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 Garofalo Health Care and Sonic Healthcare Limited, you can compare the effects of market volatilities on Garofalo 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 Garofalo Health with a short position of Sonic Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garofalo Health and Sonic Healthcare.
Diversification Opportunities for Garofalo Health and Sonic Healthcare
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Garofalo and Sonic is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Garofalo Health Care and Sonic Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Healthcare and Garofalo 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 Garofalo Health Care 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 Garofalo Health i.e., Garofalo Health and Sonic Healthcare go up and down completely randomly.
Pair Corralation between Garofalo Health and Sonic Healthcare
Assuming the 90 days horizon Garofalo Health Care is expected to under-perform the Sonic Healthcare. In addition to that, Garofalo Health is 1.24 times more volatile than Sonic Healthcare Limited. It trades about -0.25 of its total potential returns per unit of risk. Sonic Healthcare Limited is currently generating about 0.23 per unit of volatility. If you would invest 1,584 in Sonic Healthcare Limited on October 28, 2024 and sell it today you would earn a total of 76.00 from holding Sonic Healthcare Limited or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Garofalo Health Care vs. Sonic Healthcare Limited
Performance |
| Timeline |
| Garofalo Health Care |
| Sonic Healthcare |
Garofalo Health and Sonic Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garofalo Health and Sonic Healthcare
The main advantage of trading using opposite Garofalo Health and Sonic Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garofalo 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.| Garofalo Health vs. Sonic Healthcare Limited | Garofalo Health vs. Superior Plus Corp | Garofalo Health vs. Origin Agritech | Garofalo Health vs. Identiv |
| Sonic Healthcare vs. SEKISUI CHEMICAL | Sonic Healthcare vs. Soken Chemical Engineering | Sonic Healthcare vs. TIANDE CHEMICAL | Sonic Healthcare vs. ANGLO ASIAN MINING |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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