Correlation Between Sonova Holding and Demant AS
Can any of the company-specific risk be diversified away by investing in both Sonova Holding and Demant AS 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 Demant AS 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 Demant AS ADR, you can compare the effects of market volatilities on Sonova Holding and Demant AS 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 Demant AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonova Holding and Demant AS.
Diversification Opportunities for Sonova Holding and Demant AS
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sonova and Demant is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sonova Holding AG and Demant AS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Demant AS ADR 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 Demant AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Demant AS ADR has no effect on the direction of Sonova Holding i.e., Sonova Holding and Demant AS go up and down completely randomly.
Pair Corralation between Sonova Holding and Demant AS
Assuming the 90 days horizon Sonova Holding AG is expected to generate 0.92 times more return on investment than Demant AS. However, Sonova Holding AG is 1.09 times less risky than Demant AS. It trades about 0.02 of its potential returns per unit of risk. Demant AS ADR is currently generating about -0.01 per unit of risk. If you would invest 6,218 in Sonova Holding AG on August 30, 2024 and sell it today you would earn a total of 667.00 from holding Sonova Holding AG or generate 10.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonova Holding AG vs. Demant AS ADR
Performance |
| Timeline |
| Sonova Holding AG |
| Demant AS ADR |
Sonova Holding and Demant AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonova Holding and Demant AS
The main advantage of trading using opposite Sonova Holding and Demant AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonova Holding position performs unexpectedly, Demant AS 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 Demant AS will offset losses from the drop in Demant AS's 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 |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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