Correlation Between Sonic Healthcare and Aeris Environmental
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Aeris Environmental 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 Aeris Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Healthcare and Aeris Environmental, you can compare the effects of market volatilities on Sonic Healthcare and Aeris Environmental 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 Aeris Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Aeris Environmental.
Diversification Opportunities for Sonic Healthcare and Aeris Environmental
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sonic and Aeris is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare and Aeris Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeris Environmental 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 are associated (or correlated) with Aeris Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeris Environmental has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Aeris Environmental go up and down completely randomly.
Pair Corralation between Sonic Healthcare and Aeris Environmental
Assuming the 90 days trading horizon Sonic Healthcare is expected to generate 0.52 times more return on investment than Aeris Environmental. However, Sonic Healthcare is 1.93 times less risky than Aeris Environmental. It trades about 0.16 of its potential returns per unit of risk. Aeris Environmental is currently generating about -0.06 per unit of risk. If you would invest 2,669 in Sonic Healthcare on September 13, 2024 and sell it today you would earn a total of 159.00 from holding Sonic Healthcare or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonic Healthcare vs. Aeris Environmental
Performance |
| Timeline |
| Sonic Healthcare |
| Aeris Environmental |
Sonic Healthcare and Aeris Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and Aeris Environmental
The main advantage of trading using opposite Sonic Healthcare and Aeris Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Aeris Environmental 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 Aeris Environmental will offset losses from the drop in Aeris Environmental's long position.| Sonic Healthcare vs. Aeris Environmental | Sonic Healthcare vs. Retail Food Group | Sonic Healthcare vs. Farm Pride Foods | Sonic Healthcare vs. Falcon Metals |
| Aeris Environmental vs. Southern Cross Gold | Aeris Environmental vs. Minbos Resources | Aeris Environmental vs. Tlou Energy | Aeris Environmental vs. Encounter Resources |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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