Correlation Between THAI BEVERAGE and Sonic Healthcare
Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE and Sonic Healthcare 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 THAI BEVERAGE and Sonic Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and Sonic Healthcare Limited, you can compare the effects of market volatilities on THAI BEVERAGE and Sonic Healthcare 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 THAI BEVERAGE with a short position of Sonic Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and Sonic Healthcare.
Diversification Opportunities for THAI BEVERAGE and Sonic Healthcare
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between THAI and Sonic is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Sonic Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Healthcare and THAI BEVERAGE 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 THAI BEVERAGE are associated (or correlated) with Sonic Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonic Healthcare has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Sonic Healthcare go up and down completely randomly.
Pair Corralation between THAI BEVERAGE and Sonic Healthcare
Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 1.54 times more return on investment than Sonic Healthcare. However, THAI BEVERAGE is 1.54 times more volatile than Sonic Healthcare Limited. It trades about 0.06 of its potential returns per unit of risk. Sonic Healthcare Limited is currently generating about 0.08 per unit of risk. If you would invest 32.00 in THAI BEVERAGE on November 3, 2024 and sell it today you would earn a total of 5.00 from holding THAI BEVERAGE or generate 15.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
THAI BEVERAGE vs. Sonic Healthcare Limited
Performance |
| Timeline |
| THAI BEVERAGE |
| Sonic Healthcare |
THAI BEVERAGE and Sonic Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THAI BEVERAGE and Sonic Healthcare
The main advantage of trading using opposite THAI BEVERAGE and Sonic Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE position performs unexpectedly, Sonic Healthcare 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 Sonic Healthcare will offset losses from the drop in Sonic Healthcare's long position.| THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc |
| Sonic Healthcare vs. Benchmark Electronics | Sonic Healthcare vs. LG Electronics | Sonic Healthcare vs. Arrow Electronics | Sonic Healthcare vs. Samsung Electronics Co |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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