Correlation Between Great Eastern and Sartorius Stedim

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

By analyzing existing cross correlation between Great Eastern Holdings and Sartorius Stedim Biotech, you can compare the effects of market volatilities on Great Eastern and Sartorius Stedim 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 Great Eastern with a short position of Sartorius Stedim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Eastern and Sartorius Stedim.

Diversification Opportunities for Great Eastern and Sartorius Stedim

0.0

Correlation Coefficient

Great Eastern  Sartorius Stedim

Pay attention - limited upside

The 3 months correlation between Great and Sartorius is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Great Eastern Holdings and Sartorius Stedim Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sartorius Stedim Biotech and Great Eastern 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 Great Eastern Holdings are associated (or correlated) with Sartorius Stedim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sartorius Stedim Biotech has no effect on the direction of Great Eastern i.e., Great Eastern and Sartorius Stedim go up and down completely randomly.

Pair Corralation between Great Eastern and Sartorius Stedim

Assuming the 90 days horizon Great Eastern is expected to generate 6.45 times less return on investment than Sartorius Stedim. But when comparing it to its historical volatility, Great Eastern Holdings is 12.6 times less risky than Sartorius Stedim. It trades about 0.09 of its potential returns per unit of risk. Sartorius Stedim Biotech is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  19,772  in Sartorius Stedim Biotech on February 1, 2024 and sell it today you would earn a total of  2,228  from holding Sartorius Stedim Biotech or generate 11.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

Great Eastern Holdings  vs.  Sartorius Stedim Biotech

Great Eastern Holdings

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Great Eastern Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Great Eastern is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Sartorius Stedim Biotech

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Sartorius Stedim Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Great Eastern and Sartorius Stedim

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

The idea behind Great Eastern Holdings and Sartorius Stedim Biotech 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.