Correlation Between Sonic Healthcare and Star Entertainment
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Star Entertainment 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 Star Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Healthcare and Star Entertainment Group, you can compare the effects of market volatilities on Sonic Healthcare and Star Entertainment 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 Star Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Star Entertainment.
Diversification Opportunities for Sonic Healthcare and Star Entertainment
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sonic and Star is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare and Star Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Entertainment 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 Star Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Entertainment has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Star Entertainment go up and down completely randomly.
Pair Corralation between Sonic Healthcare and Star Entertainment
Assuming the 90 days trading horizon Sonic Healthcare is expected to generate 0.22 times more return on investment than Star Entertainment. However, Sonic Healthcare is 4.54 times less risky than Star Entertainment. It trades about 0.04 of its potential returns per unit of risk. Star Entertainment Group is currently generating about -0.08 per unit of risk. If you would invest 2,613 in Sonic Healthcare on October 12, 2024 and sell it today you would earn a total of 192.00 from holding Sonic Healthcare or generate 7.35% 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. Star Entertainment Group
Performance |
| Timeline |
| Sonic Healthcare |
| Star Entertainment |
Sonic Healthcare and Star Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and Star Entertainment
The main advantage of trading using opposite Sonic Healthcare and Star Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Star Entertainment 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 Star Entertainment will offset losses from the drop in Star Entertainment's long position.| Sonic Healthcare vs. Aneka Tambang Tbk | Sonic Healthcare vs. BHP Group Limited | Sonic Healthcare vs. Rio Tinto | Sonic Healthcare vs. Macquarie Group Ltd |
| Star Entertainment vs. Clime Investment Management | Star Entertainment vs. Apiam Animal Health | Star Entertainment vs. Austco Healthcare | Star Entertainment 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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