Correlation Between GE HealthCare and Cogstate
Can any of the company-specific risk be diversified away by investing in both GE HealthCare and Cogstate 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 Cogstate 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 Cogstate Limited, you can compare the effects of market volatilities on GE HealthCare and Cogstate 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 Cogstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE HealthCare and Cogstate.
Diversification Opportunities for GE HealthCare and Cogstate
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between GEHC and Cogstate is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding GE HealthCare Technologies and Cogstate Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogstate Limited 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 Cogstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogstate Limited has no effect on the direction of GE HealthCare i.e., GE HealthCare and Cogstate go up and down completely randomly.
Pair Corralation between GE HealthCare and Cogstate
Given the investment horizon of 90 days GE HealthCare Technologies is expected to under-perform the Cogstate. But the stock apears to be less risky and, when comparing its historical volatility, GE HealthCare Technologies is 1.62 times less risky than Cogstate. The stock trades about -0.21 of its potential returns per unit of risk. The Cogstate Limited is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 65.00 in Cogstate Limited on August 30, 2024 and sell it today you would lose (1.00) from holding Cogstate Limited or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
GE HealthCare Technologies vs. Cogstate Limited
Performance |
| Timeline |
| GE HealthCare Techno |
| Cogstate Limited |
GE HealthCare and Cogstate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE HealthCare and Cogstate
The main advantage of trading using opposite GE HealthCare and Cogstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE HealthCare position performs unexpectedly, Cogstate 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 Cogstate will offset losses from the drop in Cogstate's long position.| GE HealthCare vs. Teladoc | GE HealthCare vs. Veeva Systems Class | GE HealthCare vs. 10X Genomics | GE HealthCare vs. Progyny |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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