Correlation Between Sonic Healthcare and Sotera Health
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Sotera Health 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 Sotera Health 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 Sotera Health Co, you can compare the effects of market volatilities on Sonic Healthcare and Sotera Health 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 Sotera Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Sotera Health.
Diversification Opportunities for Sonic Healthcare and Sotera Health
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sonic and Sotera is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare Ltd and Sotera Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sotera Health 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 Sotera Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sotera Health has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Sotera Health go up and down completely randomly.
Pair Corralation between Sonic Healthcare and Sotera Health
Assuming the 90 days horizon Sonic Healthcare Ltd is expected to generate 1.0 times more return on investment than Sotera Health. However, Sonic Healthcare Ltd is 1.0 times less risky than Sotera Health. It trades about 0.11 of its potential returns per unit of risk. Sotera Health Co is currently generating about -0.32 per unit of risk. If you would invest 1,751 in Sonic Healthcare Ltd on September 3, 2024 and sell it today you would earn a total of 94.00 from holding Sonic Healthcare Ltd or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonic Healthcare Ltd vs. Sotera Health Co
Performance |
| Timeline |
| Sonic Healthcare |
| Sotera Health |
Sonic Healthcare and Sotera Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and Sotera Health
The main advantage of trading using opposite Sonic Healthcare and Sotera Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Sotera Health 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 Sotera Health will offset losses from the drop in Sotera Health's long position.| Sonic Healthcare vs. Neuronetics | Sonic Healthcare vs. Intelligent Bio Solutions | Sonic Healthcare vs. Biodesix | Sonic Healthcare vs. Precipio |
| Sotera Health vs. Qiagen NV | Sotera Health vs. Aclaris Therapeutics | Sotera Health vs. Neogen | Sotera Health vs. RadNet Inc |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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