Correlation Between GE HealthCare and Certara

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

By analyzing existing cross correlation between GE HealthCare Technologies and Certara, you can compare the effects of market volatilities on GE HealthCare and Certara 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 GE HealthCare with a short position of Certara. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE HealthCare and Certara.

Diversification Opportunities for GE HealthCare and Certara

0.82

Correlation Coefficient

GE HealthCare  Certara

Very poor diversification

The 3 months correlation between GEHC and Certara is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding GE HealthCare Technologies and Certara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Certara and GE 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 GE HealthCare Technologies are associated (or correlated) with Certara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Certara has no effect on the direction of GE HealthCare i.e., GE HealthCare and Certara go up and down completely randomly.

Pair Corralation between GE HealthCare and Certara

Given the investment horizon of 90 days GE HealthCare Technologies is expected to generate 0.6 times more return on investment than Certara. However, GE HealthCare Technologies is 1.68 times less risky than Certara. It trades about 0.03 of its potential returns per unit of risk. Certara is currently generating about -0.02 per unit of risk. If you would invest  7,857  in GE HealthCare Technologies on December 28, 2024 and sell it today you would earn a total of  144.00  from holding GE HealthCare Technologies or generate 1.83% return on investment over 90 days.

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

GE HealthCare Technologies  vs.  Certara

GE HealthCare Techno

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GE HealthCare Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, GE HealthCare is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Certara

Risk-Adjusted Performance

Very Weak

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

Pair Trading with GE HealthCare and Certara

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

The idea behind GE HealthCare Technologies and Certara 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.