Correlation Between Fresenius Medical and Public Service
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Public Service 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 Fresenius Medical and Public Service into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fresenius Medical Care and Public Service Enterprise, you can compare the effects of market volatilities on Fresenius Medical and Public Service 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 Fresenius Medical with a short position of Public Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Public Service.
Diversification Opportunities for Fresenius Medical and Public Service
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fresenius and Public is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Public Service Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Service Enterprise and Fresenius Medical 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 Fresenius Medical Care are associated (or correlated) with Public Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Service Enterprise has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Public Service go up and down completely randomly.
Pair Corralation between Fresenius Medical and Public Service
Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 1.17 times more return on investment than Public Service. However, Fresenius Medical is 1.17 times more volatile than Public Service Enterprise. It trades about 0.18 of its potential returns per unit of risk. Public Service Enterprise is currently generating about -0.04 per unit of risk. If you would invest 3,977 in Fresenius Medical Care on October 12, 2024 and sell it today you would earn a total of 386.00 from holding Fresenius Medical Care or generate 9.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 92.86% |
| Values | Daily Returns |
Fresenius Medical Care vs. Public Service Enterprise
Performance |
| Timeline |
| Fresenius Medical Care |
| Public Service Enterprise |
Fresenius Medical and Public Service Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Public Service
The main advantage of trading using opposite Fresenius Medical and Public Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Public Service 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 Public Service will offset losses from the drop in Public Service's long position.| Fresenius Medical vs. Gamma Communications PLC | Fresenius Medical vs. EJF Investments | Fresenius Medical vs. Compal Electronics GDR | Fresenius Medical vs. Aeorema Communications Plc |
| Public Service vs. Litigation Capital Management | Public Service vs. Impax Asset Management | Public Service vs. Light Science Technologies | Public Service vs. Waste Management |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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