Correlation Between Sotera Health and GTH

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

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

Diversification Opportunities for Sotera Health and GTH

-0.82

Correlation Coefficient

Sotera Health  GTH

Pay attention - limited upside

The 3 months correlation between Sotera and GTH is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sotera Health Co and GTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GTH and Sotera Health 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 Sotera Health Co are associated (or correlated) with GTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GTH has no effect on the direction of Sotera Health i.e., Sotera Health and GTH go up and down completely randomly.

Pair Corralation between Sotera Health and GTH

If you would invest  402.00  in GTH on February 4, 2024 and sell it today you would earn a total of  0.00  from holding GTH or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	4.35%
Values	Daily Returns

Sotera Health Co  vs.  GTH

Sotera Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sotera Health Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

GTH

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days GTH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly unsteady basic indicators, GTH may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Sotera Health and GTH

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

The idea behind Sotera Health Co and GTH 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.