Correlation Between Sonic Healthcare and Option Care
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Option Care 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 Option Care 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 Option Care Health, you can compare the effects of market volatilities on Sonic Healthcare and Option Care 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 Option Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Option Care.
Diversification Opportunities for Sonic Healthcare and Option Care
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sonic and Option is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare Limited and Option Care Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Option Care Health 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 Option Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Option Care Health has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Option Care go up and down completely randomly.
Pair Corralation between Sonic Healthcare and Option Care
Assuming the 90 days horizon Sonic Healthcare Limited is expected to generate 0.77 times more return on investment than Option Care. However, Sonic Healthcare Limited is 1.31 times less risky than Option Care. It trades about 0.02 of its potential returns per unit of risk. Option Care Health is currently generating about -0.02 per unit of risk. If you would invest 1,616 in Sonic Healthcare Limited on September 14, 2024 and sell it today you would earn a total of 84.00 from holding Sonic Healthcare Limited or generate 5.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonic Healthcare Limited vs. Option Care Health
Performance |
| Timeline |
| Sonic Healthcare |
| Option Care Health |
Sonic Healthcare and Option Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and Option Care
The main advantage of trading using opposite Sonic Healthcare and Option Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Option Care 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 Option Care will offset losses from the drop in Option Care'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 |
| Option Care vs. JD HEALTH INTL | Option Care vs. Fresenius SE Co | Option Care vs. Fresenius Medical Care | Option Care vs. Sonic Healthcare Limited |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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