Correlation Between Sonic Healthcare and Lonza Group
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Lonza Group 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 Lonza Group 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 Lonza Group AG, you can compare the effects of market volatilities on Sonic Healthcare and Lonza Group 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 Lonza Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Lonza Group.
Diversification Opportunities for Sonic Healthcare and Lonza Group
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sonic and Lonza is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare Limited and Lonza Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group AG 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 Lonza Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lonza Group AG has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Lonza Group go up and down completely randomly.
Pair Corralation between Sonic Healthcare and Lonza Group
Assuming the 90 days horizon Sonic Healthcare Limited is expected to generate 5.46 times more return on investment than Lonza Group. However, Sonic Healthcare is 5.46 times more volatile than Lonza Group AG. It trades about 0.05 of its potential returns per unit of risk. Lonza Group AG is currently generating about 0.18 per unit of risk. If you would invest 1,630 in Sonic Healthcare Limited on October 20, 2024 and sell it today you would earn a total of 44.00 from holding Sonic Healthcare Limited or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonic Healthcare Limited vs. Lonza Group AG
Performance |
| Timeline |
| Sonic Healthcare |
| Lonza Group AG |
Sonic Healthcare and Lonza Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and Lonza Group
The main advantage of trading using opposite Sonic Healthcare and Lonza Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Lonza Group 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 Lonza Group will offset losses from the drop in Lonza Group's long position.| Sonic Healthcare vs. China New Energy | Sonic Healthcare vs. Charles River Laboratories | Sonic Healthcare vs. Qiagen NV | Sonic Healthcare vs. Thermo Fisher Scientific |
| Lonza Group vs. Revvity | Lonza Group vs. Sonic Healthcare Limited | Lonza Group vs. Personalis | Lonza Group vs. Applied DNA Sciences |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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