Correlation Between Generation BioCo and Sotera Health
Can any of the company-specific risk be diversified away by investing in both Generation BioCo and Sotera Health 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 Generation BioCo and Sotera Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Generation BioCo and Sotera Health Co, you can compare the effects of market volatilities on Generation BioCo and Sotera Health 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 Generation BioCo with a short position of Sotera Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generation BioCo and Sotera Health.
Diversification Opportunities for Generation BioCo and Sotera Health
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Generation and Sotera is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Generation BioCo and Sotera Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sotera Health and Generation BioCo 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 Generation BioCo are associated (or correlated) with Sotera Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sotera Health has no effect on the direction of Generation BioCo i.e., Generation BioCo and Sotera Health go up and down completely randomly.
Pair Corralation between Generation BioCo and Sotera Health
Given the investment horizon of 90 days Generation BioCo is expected to generate 2.46 times more return on investment than Sotera Health. However, Generation BioCo is 2.46 times more volatile than Sotera Health Co. It trades about 0.11 of its potential returns per unit of risk. Sotera Health Co is currently generating about -0.21 per unit of risk. If you would invest 221.00 in Generation BioCo on February 24, 2024 and sell it today you would earn a total of 92.00 from holding Generation BioCo or generate 41.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Generation BioCo vs. Sotera Health Co
Performance |
Timeline |
Generation BioCo |
Sotera Health |
Generation BioCo and Sotera Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Generation BioCo and Sotera Health
The main advantage of trading using opposite Generation BioCo and Sotera Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generation BioCo position performs unexpectedly, Sotera Health 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 Sotera Health will offset losses from the drop in Sotera Health's long position.Generation BioCo vs. Monte Rosa Therapeutics | Generation BioCo vs. NkartaInc | Generation BioCo vs. Lyell Immunopharma | Generation BioCo vs. Sana Biotechnology |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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