Correlation Between Sonic Healthcare and Patriot Battery
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Patriot Battery 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 Patriot Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Healthcare and Patriot Battery Metals, you can compare the effects of market volatilities on Sonic Healthcare and Patriot Battery 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 Patriot Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Patriot Battery.
Diversification Opportunities for Sonic Healthcare and Patriot Battery
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sonic and Patriot is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare and Patriot Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot Battery 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 Patriot Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot Battery Metals has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Patriot Battery go up and down completely randomly.
Pair Corralation between Sonic Healthcare and Patriot Battery
Assuming the 90 days trading horizon Sonic Healthcare is expected to generate 0.29 times more return on investment than Patriot Battery. However, Sonic Healthcare is 3.46 times less risky than Patriot Battery. It trades about 0.1 of its potential returns per unit of risk. Patriot Battery Metals is currently generating about -0.06 per unit of risk. If you would invest 2,722 in Sonic Healthcare on September 12, 2024 and sell it today you would earn a total of 106.00 from holding Sonic Healthcare or generate 3.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonic Healthcare vs. Patriot Battery Metals
Performance |
| Timeline |
| Sonic Healthcare |
| Patriot Battery Metals |
Sonic Healthcare and Patriot Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and Patriot Battery
The main advantage of trading using opposite Sonic Healthcare and Patriot Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Patriot Battery 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 Patriot Battery will offset losses from the drop in Patriot Battery's long position.| Sonic Healthcare vs. CSL | Sonic Healthcare vs. Tamawood | Sonic Healthcare vs. Cochlear | Sonic Healthcare vs. Rea Group |
| Patriot Battery vs. Legacy Iron Ore | Patriot Battery vs. Farm Pride Foods | Patriot Battery vs. Retail Food Group | Patriot Battery vs. Collins Foods |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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