Correlation Between Sonic Healthcare and Midway
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Midway 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 Midway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Healthcare and Midway, you can compare the effects of market volatilities on Sonic Healthcare and Midway 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 Midway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Midway.
Diversification Opportunities for Sonic Healthcare and Midway
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sonic and Midway is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare and Midway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midway 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 Midway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midway has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Midway go up and down completely randomly.
Pair Corralation between Sonic Healthcare and Midway
Assuming the 90 days trading horizon Sonic Healthcare is expected to generate 14.8 times less return on investment than Midway. But when comparing it to its historical volatility, Sonic Healthcare is 2.93 times less risky than Midway. It trades about 0.01 of its potential returns per unit of risk. Midway is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 88.00 in Midway on September 3, 2024 and sell it today you would earn a total of 37.00 from holding Midway or generate 42.05% 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. Midway
Performance |
| Timeline |
| Sonic Healthcare |
| Midway |
Sonic Healthcare and Midway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and Midway
The main advantage of trading using opposite Sonic Healthcare and Midway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Midway 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 Midway will offset losses from the drop in Midway's long position.| Sonic Healthcare vs. TTG Fintech | Sonic Healthcare vs. Land Homes Group | Sonic Healthcare vs. Regis Healthcare | Sonic Healthcare vs. Horseshoe Metals |
| Midway vs. Apiam Animal Health | Midway vs. Sonic Healthcare | Midway vs. Nine Entertainment Co | Midway vs. Kneomedia |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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