Correlation Between Guardant Health and Stevanato Group

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

By analyzing existing cross correlation between Guardant Health and Stevanato Group SpA, you can compare the effects of market volatilities on Guardant Health 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 Guardant Health with a short position of Stevanato Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardant Health and Stevanato Group.

Diversification Opportunities for Guardant Health and Stevanato Group

0.63

Correlation Coefficient

Guardant Health  Stevanato Group

Poor diversification

The 3 months correlation between Guardant and Stevanato is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health 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 Guardant Health 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 Guardant Health 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 Guardant Health i.e., Guardant Health and Stevanato Group go up and down completely randomly.

Pair Corralation between Guardant Health and Stevanato Group

Allowing for the 90-day total investment horizon Guardant Health is expected to generate 42.81 times less return on investment than Stevanato Group. In addition to that, Guardant Health is 1.13 times more volatile than Stevanato Group SpA. It trades about 0.01 of its total potential returns per unit of risk. Stevanato Group SpA is currently generating about 0.29 per unit of volatility. If you would invest  2,056  in Stevanato Group SpA on October 9, 2024 and sell it today you would earn a total of  355.00  from holding Stevanato Group SpA or generate 17.27% return on investment over 90 days.

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

Guardant Health  vs.  Stevanato Group SpA

Guardant Health

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guardant Health are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Guardant Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Stevanato Group SpA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stevanato Group SpA are ranked lower than 10 (%) 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 Guardant Health and Stevanato Group

The main advantage of trading using opposite Guardant Health and Stevanato Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardant Health 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 Guardant Health 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.