Correlation Between Global Health and Sonic Healthcare
Can any of the company-specific risk be diversified away by investing in both Global 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 Global 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 Global Health and Sonic Healthcare, you can compare the effects of market volatilities on Global 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 Global Health with a short position of Sonic Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Health and Sonic Healthcare.
Diversification Opportunities for Global Health and Sonic Healthcare
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and Sonic is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Global Health and Sonic Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Healthcare and Global 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 Global 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 Global Health i.e., Global Health and Sonic Healthcare go up and down completely randomly.
Pair Corralation between Global Health and Sonic Healthcare
Assuming the 90 days trading horizon Global Health is expected to generate 7.18 times less return on investment than Sonic Healthcare. In addition to that, Global Health is 1.23 times more volatile than Sonic Healthcare. It trades about 0.01 of its total potential returns per unit of risk. Sonic Healthcare is currently generating about 0.09 per unit of volatility. If you would invest 2,767 in Sonic Healthcare on August 29, 2024 and sell it today you would earn a total of 101.00 from holding Sonic Healthcare or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Health vs. Sonic Healthcare
Performance |
| Timeline |
| Global Health |
| Sonic Healthcare |
Global Health and Sonic Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Health and Sonic Healthcare
The main advantage of trading using opposite Global Health and Sonic Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global 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.| Global Health vs. Westpac Banking | Global Health vs. Champion Iron | Global Health vs. Ridley | Global Health vs. Peel Mining |
| Sonic Healthcare vs. Summit Resources Limited | Sonic Healthcare vs. Champion Iron | Sonic Healthcare vs. Ridley | Sonic Healthcare vs. Peel 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |