Correlation Between Sonic Healthcare and Mondi PLC
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Mondi PLC 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 Mondi PLC 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 Mondi PLC ADR, you can compare the effects of market volatilities on Sonic Healthcare and Mondi PLC 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 Mondi PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Mondi PLC.
Diversification Opportunities for Sonic Healthcare and Mondi PLC
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sonic and Mondi is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare Ltd and Mondi PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondi PLC ADR 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 Mondi PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondi PLC ADR has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Mondi PLC go up and down completely randomly.
Pair Corralation between Sonic Healthcare and Mondi PLC
Assuming the 90 days horizon Sonic Healthcare Ltd is expected to generate 0.97 times more return on investment than Mondi PLC. However, Sonic Healthcare Ltd is 1.04 times less risky than Mondi PLC. It trades about 0.09 of its potential returns per unit of risk. Mondi PLC ADR is currently generating about -0.13 per unit of risk. If you would invest 1,573 in Sonic Healthcare Ltd on August 25, 2024 and sell it today you would earn a total of 287.00 from holding Sonic Healthcare Ltd or generate 18.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonic Healthcare Ltd vs. Mondi PLC ADR
Performance |
| Timeline |
| Sonic Healthcare |
| Mondi PLC ADR |
Sonic Healthcare and Mondi PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and Mondi PLC
The main advantage of trading using opposite Sonic Healthcare and Mondi PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Mondi PLC 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 Mondi PLC will offset losses from the drop in Mondi PLC's long position.| Sonic Healthcare vs. Neuronetics | Sonic Healthcare vs. Intelligent Bio Solutions | Sonic Healthcare vs. Biodesix | Sonic Healthcare vs. Precipio |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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