Correlation Between Sonic Healthcare and ProPhase Labs
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and ProPhase Labs 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 ProPhase Labs 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 ProPhase Labs, you can compare the effects of market volatilities on Sonic Healthcare and ProPhase Labs 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 ProPhase Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and ProPhase Labs.
Diversification Opportunities for Sonic Healthcare and ProPhase Labs
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sonic and ProPhase is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare Limited and ProPhase Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProPhase Labs 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 ProPhase Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProPhase Labs has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and ProPhase Labs go up and down completely randomly.
Pair Corralation between Sonic Healthcare and ProPhase Labs
Assuming the 90 days horizon Sonic Healthcare Limited is expected to generate 0.74 times more return on investment than ProPhase Labs. However, Sonic Healthcare Limited is 1.35 times less risky than ProPhase Labs. It trades about 0.01 of its potential returns per unit of risk. ProPhase Labs is currently generating about -0.09 per unit of risk. If you would invest 1,918 in Sonic Healthcare Limited on September 4, 2024 and sell it today you would lose (214.00) from holding Sonic Healthcare Limited or give up 11.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.97% |
| Values | Daily Returns |
Sonic Healthcare Limited vs. ProPhase Labs
Performance |
| Timeline |
| Sonic Healthcare |
| ProPhase Labs |
Sonic Healthcare and ProPhase Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and ProPhase Labs
The main advantage of trading using opposite Sonic Healthcare and ProPhase Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, ProPhase Labs 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 ProPhase Labs will offset losses from the drop in ProPhase Labs' long position.| Sonic Healthcare vs. Lonza Group AG | Sonic Healthcare vs. Personalis | Sonic Healthcare vs. Applied DNA Sciences | Sonic Healthcare vs. ProPhase Labs |
| ProPhase Labs vs. Star Equity Holdings | ProPhase Labs vs. Enzo Biochem | ProPhase Labs vs. Neuronetics | ProPhase Labs vs. Intelligent Bio Solutions |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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