Correlation Between Sonic Healthcare and ABACUS STORAGE

Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and ABACUS STORAGE 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 ABACUS STORAGE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sonic Healthcare and ABACUS STORAGE KING, you can compare the effects of market volatilities on Sonic Healthcare and ABACUS STORAGE 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 ABACUS STORAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and ABACUS STORAGE.

Diversification Opportunities for Sonic Healthcare and ABACUS STORAGE

0.24

Correlation Coefficient

Sonic Healthcare  ABACUS STORAGE

Modest diversification

The 3 months correlation between Sonic and ABACUS is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare and ABACUS STORAGE KING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABACUS STORAGE KING 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 are associated (or correlated) with ABACUS STORAGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABACUS STORAGE KING has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and ABACUS STORAGE go up and down completely randomly.

Pair Corralation between Sonic Healthcare and ABACUS STORAGE

Assuming the 90 days trading horizon Sonic Healthcare is expected to under-perform the ABACUS STORAGE. But the stock apears to be less risky and, when comparing its historical volatility, Sonic Healthcare is 1.44 times less risky than ABACUS STORAGE. The stock trades about -0.06 of its potential returns per unit of risk. The ABACUS STORAGE KING is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  112.00  in ABACUS STORAGE KING on December 22, 2024 and sell it today you would earn a total of  7.00  from holding ABACUS STORAGE KING or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sonic Healthcare  vs.  ABACUS STORAGE KING

Sonic Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sonic Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Sonic Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ABACUS STORAGE KING

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ABACUS STORAGE KING are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, ABACUS STORAGE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sonic Healthcare and ABACUS STORAGE

The main advantage of trading using opposite Sonic Healthcare and ABACUS STORAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, ABACUS STORAGE 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 ABACUS STORAGE will offset losses from the drop in ABACUS STORAGE's long position.

The idea behind Sonic Healthcare and ABACUS STORAGE KING pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..