Correlation Between Thermo Fisher and Sonic Healthcare
Can any of the company-specific risk be diversified away by investing in both Thermo Fisher 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 Thermo Fisher and Sonic Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thermo Fisher Scientific and Sonic Healthcare Limited, you can compare the effects of market volatilities on Thermo Fisher 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 Thermo Fisher with a short position of Sonic Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermo Fisher and Sonic Healthcare.
Diversification Opportunities for Thermo Fisher and Sonic Healthcare
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Thermo and Sonic is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Thermo Fisher Scientific and Sonic Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Healthcare and Thermo Fisher 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 Thermo Fisher Scientific 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 Thermo Fisher i.e., Thermo Fisher and Sonic Healthcare go up and down completely randomly.
Pair Corralation between Thermo Fisher and Sonic Healthcare
Considering the 90-day investment horizon Thermo Fisher Scientific is expected to under-perform the Sonic Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Thermo Fisher Scientific is 2.41 times less risky than Sonic Healthcare. The stock trades about -0.16 of its potential returns per unit of risk. The Sonic Healthcare Limited is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,853 in Sonic Healthcare Limited on September 12, 2024 and sell it today you would lose (118.00) from holding Sonic Healthcare Limited or give up 6.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thermo Fisher Scientific vs. Sonic Healthcare Limited
Performance |
| Timeline |
| Thermo Fisher Scientific |
| Sonic Healthcare |
Thermo Fisher and Sonic Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thermo Fisher and Sonic Healthcare
The main advantage of trading using opposite Thermo Fisher and Sonic Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermo Fisher 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.| Thermo Fisher vs. Agilent Technologies | Thermo Fisher vs. IDEXX Laboratories | Thermo Fisher vs. Illumina | Thermo Fisher vs. Waters |
| Sonic Healthcare vs. Lonza Group AG | Sonic Healthcare vs. Personalis | Sonic Healthcare vs. Applied DNA Sciences | Sonic Healthcare vs. ProPhase Labs |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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