Correlation Between Sonic Healthcare and Firstwave Cloud

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

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

Diversification Opportunities for Sonic Healthcare and Firstwave Cloud

-0.4

Correlation Coefficient

Sonic Healthcare  Firstwave Cloud

Very good diversification

The 3 months correlation between Sonic and Firstwave is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare and Firstwave Cloud Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firstwave Cloud Tech 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 Firstwave Cloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firstwave Cloud Tech has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Firstwave Cloud go up and down completely randomly.

Pair Corralation between Sonic Healthcare and Firstwave Cloud

Assuming the 90 days trading horizon Sonic Healthcare is expected to generate 0.27 times more return on investment than Firstwave Cloud. However, Sonic Healthcare is 3.71 times less risky than Firstwave Cloud. It trades about 0.04 of its potential returns per unit of risk. Firstwave Cloud Technology is currently generating about 0.01 per unit of risk. If you would invest  2,715  in Sonic Healthcare on October 23, 2024 and sell it today you would earn a total of  71.00  from holding Sonic Healthcare or generate 2.62% return on investment over 90 days.

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

Sonic Healthcare  vs.  Firstwave Cloud Technology

Sonic Healthcare

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sonic Healthcare are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Firstwave Cloud Tech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sonic Healthcare and Firstwave Cloud

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

The idea behind Sonic Healthcare and Firstwave Cloud Technology 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.