Correlation Between Pharol SGPS and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both Pharol SGPS and Fresenius Medical 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 Pharol SGPS and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pharol SGPS SA and Fresenius Medical Care, you can compare the effects of market volatilities on Pharol SGPS and Fresenius Medical 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 Pharol SGPS with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pharol SGPS and Fresenius Medical.
Diversification Opportunities for Pharol SGPS and Fresenius Medical
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pharol and Fresenius is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Pharol SGPS SA and Fresenius Medical Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius Medical Care and Pharol SGPS 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 Pharol SGPS SA are associated (or correlated) with Fresenius Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius Medical Care has no effect on the direction of Pharol SGPS i.e., Pharol SGPS and Fresenius Medical go up and down completely randomly.
Pair Corralation between Pharol SGPS and Fresenius Medical
Assuming the 90 days trading horizon Pharol SGPS SA is expected to generate 1.29 times more return on investment than Fresenius Medical. However, Pharol SGPS is 1.29 times more volatile than Fresenius Medical Care. It trades about 0.02 of its potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.0 per unit of risk. If you would invest 4.06 in Pharol SGPS SA on September 12, 2024 and sell it today you would earn a total of 0.44 from holding Pharol SGPS SA or generate 10.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.44% |
| Values | Daily Returns |
Pharol SGPS SA vs. Fresenius Medical Care
Performance |
| Timeline |
| Pharol SGPS SA |
| Fresenius Medical Care |
Pharol SGPS and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pharol SGPS and Fresenius Medical
The main advantage of trading using opposite Pharol SGPS and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pharol SGPS position performs unexpectedly, Fresenius Medical 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 Fresenius Medical will offset losses from the drop in Fresenius Medical's long position.| Pharol SGPS vs. Abingdon Health Plc | Pharol SGPS vs. Fonix Mobile plc | Pharol SGPS vs. Universal Health Services | Pharol SGPS vs. Zegona Communications Plc |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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