Correlation Between Fresenius Medical and Universal Display
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Universal Display 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 Universal Display 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 Universal Display Corp, you can compare the effects of market volatilities on Fresenius Medical and Universal Display 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 Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Universal Display.
Diversification Opportunities for Fresenius Medical and Universal Display
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fresenius and Universal is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Universal Display Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display Corp 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 Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display Corp has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Universal Display go up and down completely randomly.
Pair Corralation between Fresenius Medical and Universal Display
Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 0.62 times more return on investment than Universal Display. However, Fresenius Medical Care is 1.62 times less risky than Universal Display. It trades about 0.16 of its potential returns per unit of risk. Universal Display Corp is currently generating about -0.04 per unit of risk. If you would invest 3,470 in Fresenius Medical Care on September 2, 2024 and sell it today you would earn a total of 681.00 from holding Fresenius Medical Care or generate 19.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.97% |
| Values | Daily Returns |
Fresenius Medical Care vs. Universal Display Corp
Performance |
| Timeline |
| Fresenius Medical Care |
| Universal Display Corp |
Fresenius Medical and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Universal Display
The main advantage of trading using opposite Fresenius Medical and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Universal Display 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 Universal Display will offset losses from the drop in Universal Display's long position.| Fresenius Medical vs. Uniper SE | Fresenius Medical vs. Mulberry Group PLC | Fresenius Medical vs. London Security Plc | Fresenius Medical vs. Triad Group PLC |
| Universal Display vs. Air Products Chemicals | Universal Display vs. Applied Materials | Universal Display vs. Lindsell Train Investment | Universal Display vs. Broadridge Financial Solutions |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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