Correlation Between Sonic Healthcare and Nufarm Finance
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Nufarm Finance 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 Nufarm Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Healthcare and Nufarm Finance NZ, you can compare the effects of market volatilities on Sonic Healthcare and Nufarm Finance 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 Nufarm Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Nufarm Finance.
Diversification Opportunities for Sonic Healthcare and Nufarm Finance
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sonic and Nufarm is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare and Nufarm Finance NZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Finance NZ 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 Nufarm Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm Finance NZ has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Nufarm Finance go up and down completely randomly.
Pair Corralation between Sonic Healthcare and Nufarm Finance
Assuming the 90 days trading horizon Sonic Healthcare is expected to generate 1.29 times less return on investment than Nufarm Finance. In addition to that, Sonic Healthcare is 1.46 times more volatile than Nufarm Finance NZ. It trades about 0.06 of its total potential returns per unit of risk. Nufarm Finance NZ is currently generating about 0.11 per unit of volatility. If you would invest 8,752 in Nufarm Finance NZ on September 2, 2024 and sell it today you would earn a total of 598.00 from holding Nufarm Finance NZ or generate 6.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonic Healthcare vs. Nufarm Finance NZ
Performance |
| Timeline |
| Sonic Healthcare |
| Nufarm Finance NZ |
Sonic Healthcare and Nufarm Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and Nufarm Finance
The main advantage of trading using opposite Sonic Healthcare and Nufarm Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Nufarm Finance 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 Nufarm Finance will offset losses from the drop in Nufarm Finance's long position.| Sonic Healthcare vs. Westpac Banking | Sonic Healthcare vs. iShares Global Healthcare | Sonic Healthcare vs. Australian Dairy Farms | Sonic Healthcare vs. Adriatic Metals Plc |
| Nufarm Finance vs. Ecofibre | Nufarm Finance vs. iShares Global Healthcare | Nufarm Finance vs. Ridley | Nufarm Finance vs. Australian Dairy Farms |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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