Correlation Between Sonova Holding and Koninklijke Philips
Can any of the company-specific risk be diversified away by investing in both Sonova Holding and Koninklijke Philips 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 Sonova Holding and Koninklijke Philips into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonova Holding AG and Koninklijke Philips NV, you can compare the effects of market volatilities on Sonova Holding and Koninklijke Philips 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 Sonova Holding with a short position of Koninklijke Philips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonova Holding and Koninklijke Philips.
Diversification Opportunities for Sonova Holding and Koninklijke Philips
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sonova and Koninklijke is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sonova Holding AG and Koninklijke Philips NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Philips and Sonova Holding 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 Sonova Holding AG are associated (or correlated) with Koninklijke Philips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Philips has no effect on the direction of Sonova Holding i.e., Sonova Holding and Koninklijke Philips go up and down completely randomly.
Pair Corralation between Sonova Holding and Koninklijke Philips
Assuming the 90 days horizon Sonova Holding is expected to generate 1.4 times less return on investment than Koninklijke Philips. But when comparing it to its historical volatility, Sonova Holding AG is 1.8 times less risky than Koninklijke Philips. It trades about 0.06 of its potential returns per unit of risk. Koninklijke Philips NV is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,899 in Koninklijke Philips NV on August 31, 2024 and sell it today you would earn a total of 689.00 from holding Koninklijke Philips NV or generate 36.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Sonova Holding AG vs. Koninklijke Philips NV
Performance |
| Timeline |
| Sonova Holding AG |
| Koninklijke Philips |
Sonova Holding and Koninklijke Philips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonova Holding and Koninklijke Philips
The main advantage of trading using opposite Sonova Holding and Koninklijke Philips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonova Holding position performs unexpectedly, Koninklijke Philips 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 Koninklijke Philips will offset losses from the drop in Koninklijke Philips' long position.| Sonova Holding vs. GN Store Nord | Sonova Holding vs. GN Store Nord | Sonova Holding vs. Bone Biologics Corp | Sonova Holding vs. Smith Nephew plc |
| Koninklijke Philips vs. Sonova Holding AG | Koninklijke Philips vs. Medtronic PLC | Koninklijke Philips vs. CONMED | Koninklijke Philips vs. Glaukos Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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