Correlation Between Veeva Systems and GE HealthCare

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

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

Diversification Opportunities for Veeva Systems and GE HealthCare

0.26

Correlation Coefficient

Veeva Systems  GE HealthCare

Modest diversification

The 3 months correlation between Veeva and GEHC is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Veeva Systems Class 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 Veeva Systems 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 Veeva Systems Class 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 Veeva Systems i.e., Veeva Systems and GE HealthCare go up and down completely randomly.

Pair Corralation between Veeva Systems and GE HealthCare

Given the investment horizon of 90 days Veeva Systems Class is expected to generate 1.09 times more return on investment than GE HealthCare. However, Veeva Systems is 1.09 times more volatile than GE HealthCare Technologies. It trades about 0.11 of its potential returns per unit of risk. GE HealthCare Technologies is currently generating about 0.05 per unit of risk. If you would invest  21,147  in Veeva Systems Class on December 28, 2024 and sell it today you would earn a total of  2,601  from holding Veeva Systems Class or generate 12.3% return on investment over 90 days.

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

Veeva Systems Class  vs.  GE HealthCare Technologies

Veeva Systems Class

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Veeva Systems Class are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Veeva Systems showed solid returns over the last few months and may actually be approaching a breakup point.

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 3 (%) 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 Veeva Systems and GE HealthCare

The main advantage of trading using opposite Veeva Systems and GE HealthCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veeva Systems 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 Veeva Systems Class 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.