Correlation Between Sonic Healthcare and Danaher
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Danaher 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 Danaher into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Healthcare Ltd and Danaher, you can compare the effects of market volatilities on Sonic Healthcare and Danaher 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 Danaher. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Danaher.
Diversification Opportunities for Sonic Healthcare and Danaher
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sonic and Danaher is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare Ltd and Danaher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danaher 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 Ltd are associated (or correlated) with Danaher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danaher has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Danaher go up and down completely randomly.
Pair Corralation between Sonic Healthcare and Danaher
Assuming the 90 days horizon Sonic Healthcare is expected to generate 2.31 times less return on investment than Danaher. In addition to that, Sonic Healthcare is 1.17 times more volatile than Danaher. It trades about 0.01 of its total potential returns per unit of risk. Danaher is currently generating about 0.02 per unit of volatility. If you would invest 22,444 in Danaher on September 1, 2024 and sell it today you would earn a total of 1,525 from holding Danaher or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Sonic Healthcare Ltd vs. Danaher
Performance |
| Timeline |
| Sonic Healthcare |
| Danaher |
Sonic Healthcare and Danaher Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and Danaher
The main advantage of trading using opposite Sonic Healthcare and Danaher positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Danaher 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 Danaher will offset losses from the drop in Danaher's long position.| Sonic Healthcare vs. China New Energy | Sonic Healthcare vs. Lonza Group | Sonic Healthcare vs. Charles River Laboratories | Sonic Healthcare vs. Qiagen NV |
| Danaher vs. Agilent Technologies | Danaher vs. Illumina | Danaher vs. IDEXX Laboratories | Danaher vs. Waters |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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