Correlation Between Sonic Healthcare and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Fresenius Medical 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 Sonic Healthcare and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Healthcare Limited and Fresenius Medical Care, you can compare the effects of market volatilities on Sonic Healthcare and Fresenius Medical 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 Sonic Healthcare with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Fresenius Medical.
Diversification Opportunities for Sonic Healthcare and Fresenius Medical
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sonic and Fresenius is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare Limited and Fresenius Medical Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius Medical Care and Sonic Healthcare 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 Sonic Healthcare Limited are associated (or correlated) with Fresenius Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius Medical Care has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Fresenius Medical go up and down completely randomly.
Pair Corralation between Sonic Healthcare and Fresenius Medical
Assuming the 90 days horizon Sonic Healthcare is expected to generate 3.51 times less return on investment than Fresenius Medical. But when comparing it to its historical volatility, Sonic Healthcare Limited is 1.12 times less risky than Fresenius Medical. It trades about 0.02 of its potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,462 in Fresenius Medical Care on September 14, 2024 and sell it today you would earn a total of 1,071 from holding Fresenius Medical Care or generate 30.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.64% |
| Values | Daily Returns |
Sonic Healthcare Limited vs. Fresenius Medical Care
Performance |
| Timeline |
| Sonic Healthcare |
| Fresenius Medical Care |
Sonic Healthcare and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and Fresenius Medical
The main advantage of trading using opposite Sonic Healthcare and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Fresenius Medical 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 Fresenius Medical will offset losses from the drop in Fresenius Medical's long position.| Sonic Healthcare vs. JD HEALTH INTL | Sonic Healthcare vs. Fresenius SE Co | Sonic Healthcare vs. Fresenius Medical Care | Sonic Healthcare vs. Option Care Health |
| Fresenius Medical vs. JD HEALTH INTL | Fresenius Medical vs. Fresenius SE Co | Fresenius Medical vs. Sonic Healthcare Limited | Fresenius Medical vs. Option Care Health |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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