Correlation Between Sonic Healthcare and Applied DNA
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Applied DNA 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 Applied DNA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Healthcare Limited and Applied DNA Sciences, you can compare the effects of market volatilities on Sonic Healthcare and Applied DNA 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 Applied DNA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Applied DNA.
Diversification Opportunities for Sonic Healthcare and Applied DNA
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sonic and Applied is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare Limited and Applied DNA Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied DNA Sciences 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 Limited are associated (or correlated) with Applied DNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied DNA Sciences has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Applied DNA go up and down completely randomly.
Pair Corralation between Sonic Healthcare and Applied DNA
Assuming the 90 days horizon Sonic Healthcare Limited is expected to generate 0.65 times more return on investment than Applied DNA. However, Sonic Healthcare Limited is 1.53 times less risky than Applied DNA. It trades about -0.03 of its potential returns per unit of risk. Applied DNA Sciences is currently generating about -0.21 per unit of risk. If you would invest 1,742 in Sonic Healthcare Limited on September 4, 2024 and sell it today you would lose (38.00) from holding Sonic Healthcare Limited or give up 2.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Sonic Healthcare Limited vs. Applied DNA Sciences
Performance |
| Timeline |
| Sonic Healthcare |
| Applied DNA Sciences |
Sonic Healthcare and Applied DNA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and Applied DNA
The main advantage of trading using opposite Sonic Healthcare and Applied DNA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Applied DNA 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 Applied DNA will offset losses from the drop in Applied DNA's long position.| Sonic Healthcare vs. Lonza Group AG | Sonic Healthcare vs. Personalis | Sonic Healthcare vs. Applied DNA Sciences | Sonic Healthcare vs. ProPhase Labs |
| Applied DNA vs. Biodesix | Applied DNA vs. DarioHealth Corp | Applied DNA vs. Exagen Inc | Applied DNA vs. Burning Rock Biotech |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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