Correlation Between Sonic Healthcare and Falcon Metals
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Falcon Metals 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 Falcon Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Healthcare and Falcon Metals, you can compare the effects of market volatilities on Sonic Healthcare and Falcon Metals 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 Falcon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Falcon Metals.
Diversification Opportunities for Sonic Healthcare and Falcon Metals
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sonic and Falcon is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare and Falcon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Metals 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 Falcon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Metals has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Falcon Metals go up and down completely randomly.
Pair Corralation between Sonic Healthcare and Falcon Metals
Assuming the 90 days trading horizon Sonic Healthcare is expected to generate 0.22 times more return on investment than Falcon Metals. However, Sonic Healthcare is 4.63 times less risky than Falcon Metals. It trades about 0.05 of its potential returns per unit of risk. Falcon Metals is currently generating about -0.06 per unit of risk. If you would invest 2,663 in Sonic Healthcare on November 3, 2024 and sell it today you would earn a total of 192.00 from holding Sonic Healthcare or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonic Healthcare vs. Falcon Metals
Performance |
| Timeline |
| Sonic Healthcare |
| Falcon Metals |
Sonic Healthcare and Falcon Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and Falcon Metals
The main advantage of trading using opposite Sonic Healthcare and Falcon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Falcon Metals 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 Falcon Metals will offset losses from the drop in Falcon Metals' long position.| Sonic Healthcare vs. Technology One | Sonic Healthcare vs. Step One Clothing | Sonic Healthcare vs. Thorney Technologies | Sonic Healthcare vs. Readytech Holdings |
| Falcon Metals vs. Northern Star Resources | Falcon Metals vs. Evolution Mining | Falcon Metals vs. Bluescope Steel | Falcon Metals vs. Sandfire Resources NL |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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