Correlation Between Schrodinger and GE HealthCare

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

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

Diversification Opportunities for Schrodinger and GE HealthCare

0.64

Correlation Coefficient

Schrodinger  GE HealthCare

Poor diversification

The 3 months correlation between Schrodinger and GEHC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Schrodinger and GE HealthCare Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE HealthCare Techno and Schrodinger 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 Schrodinger are associated (or correlated) with GE HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE HealthCare Techno has no effect on the direction of Schrodinger i.e., Schrodinger and GE HealthCare go up and down completely randomly.

Pair Corralation between Schrodinger and GE HealthCare

Given the investment horizon of 90 days Schrodinger is expected to generate 2.37 times more return on investment than GE HealthCare. However, Schrodinger is 2.37 times more volatile than GE HealthCare Technologies. It trades about 0.04 of its potential returns per unit of risk. GE HealthCare Technologies is currently generating about 0.03 per unit of risk. If you would invest  1,882  in Schrodinger on December 30, 2024 and sell it today you would earn a total of  114.00  from holding Schrodinger or generate 6.06% return on investment over 90 days.

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

Schrodinger  vs.  GE HealthCare Technologies

Schrodinger

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Schrodinger are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal technical and fundamental indicators, Schrodinger may actually be approaching a critical reversion point that can send shares even higher in April 2025.

GE HealthCare Techno

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GE HealthCare Technologies are ranked lower than 1 (%) 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.

Pair Trading with Schrodinger and GE HealthCare

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

The idea behind Schrodinger and GE HealthCare Technologies 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.