Correlation Between Fresenius Medical and Advanced Medical
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Advanced 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 Fresenius Medical and Advanced Medical 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 Advanced Medical Solutions, you can compare the effects of market volatilities on Fresenius Medical and Advanced 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 Fresenius Medical with a short position of Advanced Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Advanced Medical.
Diversification Opportunities for Fresenius Medical and Advanced Medical
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fresenius and Advanced is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol 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 Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Advanced Medical go up and down completely randomly.
Pair Corralation between Fresenius Medical and Advanced Medical
Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 0.52 times more return on investment than Advanced Medical. However, Fresenius Medical Care is 1.92 times less risky than Advanced Medical. It trades about 0.2 of its potential returns per unit of risk. Advanced Medical Solutions is currently generating about -0.02 per unit of risk. If you would invest 3,455 in Fresenius Medical Care on November 2, 2024 and sell it today you would earn a total of 1,348 from holding Fresenius Medical Care or generate 39.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresenius Medical Care vs. Advanced Medical Solutions
Performance |
| Timeline |
| Fresenius Medical Care |
| Advanced Medical Sol |
Fresenius Medical and Advanced Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Advanced Medical
The main advantage of trading using opposite Fresenius Medical and Advanced Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Advanced 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 Advanced Medical will offset losses from the drop in Advanced Medical's long position.| Fresenius Medical vs. Iron Mountain | Fresenius Medical vs. International Biotechnology Trust | Fresenius Medical vs. United States Steel | Fresenius Medical vs. Impax Environmental Markets |
| Advanced Medical vs. Bankers Investment Trust | Advanced Medical vs. Atalaya Mining | Advanced Medical vs. STMicroelectronics NV | Advanced Medical vs. Discover Financial Services |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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