Correlation Between Sonic Healthcare and Horseshoe Metals
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Horseshoe 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 Horseshoe 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 Horseshoe Metals, you can compare the effects of market volatilities on Sonic Healthcare and Horseshoe 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 Horseshoe Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Horseshoe Metals.
Diversification Opportunities for Sonic Healthcare and Horseshoe Metals
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sonic and Horseshoe is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare and Horseshoe Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horseshoe 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 Horseshoe Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horseshoe Metals has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Horseshoe Metals go up and down completely randomly.
Pair Corralation between Sonic Healthcare and Horseshoe Metals
Assuming the 90 days trading horizon Sonic Healthcare is expected to under-perform the Horseshoe Metals. But the stock apears to be less risky and, when comparing its historical volatility, Sonic Healthcare is 8.38 times less risky than Horseshoe Metals. The stock trades about -0.02 of its potential returns per unit of risk. The Horseshoe Metals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.70 in Horseshoe Metals on September 20, 2024 and sell it today you would earn a total of 0.70 from holding Horseshoe Metals or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonic Healthcare vs. Horseshoe Metals
Performance |
| Timeline |
| Sonic Healthcare |
| Horseshoe Metals |
Sonic Healthcare and Horseshoe Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and Horseshoe Metals
The main advantage of trading using opposite Sonic Healthcare and Horseshoe Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Horseshoe 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 Horseshoe Metals will offset losses from the drop in Horseshoe Metals' long position.| Sonic Healthcare vs. The Environmental Group | Sonic Healthcare vs. Australian Unity Office | Sonic Healthcare vs. Iron Road | Sonic Healthcare vs. Phoslock Environmental Technologies |
| Horseshoe Metals vs. Capitol Health | Horseshoe Metals vs. Epsilon Healthcare | Horseshoe Metals vs. K2 Asset Management | Horseshoe Metals vs. Sonic Healthcare |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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