Correlation Between Sonic Healthcare and Asara Resources
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Asara Resources 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 Asara Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Healthcare and Asara Resources, you can compare the effects of market volatilities on Sonic Healthcare and Asara Resources 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 Asara Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Asara Resources.
Diversification Opportunities for Sonic Healthcare and Asara Resources
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sonic and Asara is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare and Asara Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asara Resources 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 Asara Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asara Resources has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Asara Resources go up and down completely randomly.
Pair Corralation between Sonic Healthcare and Asara Resources
Assuming the 90 days trading horizon Sonic Healthcare is expected to generate 7.62 times less return on investment than Asara Resources. But when comparing it to its historical volatility, Sonic Healthcare is 4.55 times less risky than Asara Resources. It trades about 0.01 of its potential returns per unit of risk. Asara Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3.20 in Asara Resources on October 31, 2024 and sell it today you would lose (0.80) from holding Asara Resources or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonic Healthcare vs. Asara Resources
Performance |
| Timeline |
| Sonic Healthcare |
| Asara Resources |
Sonic Healthcare and Asara Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and Asara Resources
The main advantage of trading using opposite Sonic Healthcare and Asara Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Asara Resources 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 Asara Resources will offset losses from the drop in Asara Resources' long position.| Sonic Healthcare vs. DY6 Metals | Sonic Healthcare vs. Vitura Health Limited | Sonic Healthcare vs. Truscott Mining Corp | Sonic Healthcare vs. Dalaroo Metals |
| Asara Resources vs. Mount Gibson Iron | Asara Resources vs. Sequoia Financial Group | Asara Resources vs. MA Financial Group | Asara Resources vs. Champion Iron |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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