Correlation Between Sonic Healthcare and Carawine Resources

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Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Carawine 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 Carawine 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 Carawine Resources Limited, you can compare the effects of market volatilities on Sonic Healthcare and Carawine 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 Carawine Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Carawine Resources.

Diversification Opportunities for Sonic Healthcare and Carawine Resources

SonicCarawineDiversified AwaySonicCarawineDiversified Away100%
-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between Sonic and Carawine is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare and Carawine Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carawine 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 Carawine Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carawine Resources has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Carawine Resources go up and down completely randomly.

Pair Corralation between Sonic Healthcare and Carawine Resources

Assuming the 90 days trading horizon Sonic Healthcare is expected to generate 0.14 times more return on investment than Carawine Resources. However, Sonic Healthcare is 7.05 times less risky than Carawine Resources. It trades about 0.11 of its potential returns per unit of risk. Carawine Resources Limited is currently generating about -0.06 per unit of risk. If you would invest  2,786  in Sonic Healthcare on November 21, 2024 and sell it today you would earn a total of  48.00  from holding Sonic Healthcare or generate 1.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sonic Healthcare  vs.  Carawine Resources Limited

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-15-10-50510
JavaScript chart by amCharts 3.21.15SHL CWX
       Timeline  
Sonic Healthcare 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Sonic Healthcare are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Sonic Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2727.52828.52929.5
Carawine Resources 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Carawine Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.090.0950.10.1050.110.1150.12

Sonic Healthcare and Carawine Resources Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.77-2.82-1.88-0.930.01650.991.982.973.96 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15SHL CWX
       Returns  

Pair Trading with Sonic Healthcare and Carawine Resources

The main advantage of trading using opposite Sonic Healthcare and Carawine Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Carawine 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 Carawine Resources will offset losses from the drop in Carawine Resources' long position.
The idea behind Sonic Healthcare and Carawine Resources Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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