Correlation Between Sonic Healthcare and Vicinity Centres

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

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

Diversification Opportunities for Sonic Healthcare and Vicinity Centres

0.77

Correlation Coefficient

Sonic Healthcare  Vicinity Centres

Poor diversification

The 3 months correlation between Sonic and Vicinity is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare and Vicinity Centres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Centres 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 Vicinity Centres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Centres has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Vicinity Centres go up and down completely randomly.

Pair Corralation between Sonic Healthcare and Vicinity Centres

Assuming the 90 days trading horizon Sonic Healthcare is expected to generate 1.12 times less return on investment than Vicinity Centres. But when comparing it to its historical volatility, Sonic Healthcare is 1.3 times less risky than Vicinity Centres. It trades about 0.18 of its potential returns per unit of risk. Vicinity Centres is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  226.00  in Vicinity Centres on April 20, 2025 and sell it today you would earn a total of  26.00  from holding Vicinity Centres or generate 11.5% return on investment over 90 days.

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

Sonic Healthcare  vs.  Vicinity Centres

Sonic Healthcare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sonic Healthcare are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Sonic Healthcare may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Vicinity Centres

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vicinity Centres are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vicinity Centres may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Sonic Healthcare and Vicinity Centres

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

The idea behind Sonic Healthcare and Vicinity Centres 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.