Correlation Between GE HealthCare and Stevanato Group

Can any of the company-specific risk be diversified away by investing in both GE HealthCare and Stevanato Group 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 Stevanato Group 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 Stevanato Group SpA, you can compare the effects of market volatilities on GE HealthCare and Stevanato Group 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 Stevanato Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE HealthCare and Stevanato Group.

Diversification Opportunities for GE HealthCare and Stevanato Group

-0.62

Correlation Coefficient

GE HealthCare  Stevanato Group

Excellent diversification

The 3 months correlation between GEHC and Stevanato is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding GE HealthCare Technologies and Stevanato Group SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stevanato Group SpA 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 Stevanato Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stevanato Group SpA has no effect on the direction of GE HealthCare i.e., GE HealthCare and Stevanato Group go up and down completely randomly.

Pair Corralation between GE HealthCare and Stevanato Group

Given the investment horizon of 90 days GE HealthCare Technologies is expected to under-perform the Stevanato Group. But the stock apears to be less risky and, when comparing its historical volatility, GE HealthCare Technologies is 2.79 times less risky than Stevanato Group. The stock trades about -0.14 of its potential returns per unit of risk. The Stevanato Group SpA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,873  in Stevanato Group SpA on October 7, 2024 and sell it today you would earn a total of  495.00  from holding Stevanato Group SpA or generate 26.43% return on investment over 90 days.

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

GE HealthCare Technologies  vs.  Stevanato Group SpA

GE HealthCare Techno

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GE HealthCare Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Stevanato Group SpA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stevanato Group SpA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Stevanato Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GE HealthCare and Stevanato Group

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

The idea behind GE HealthCare Technologies and Stevanato Group SpA 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.