Correlation Between Fresenius Medical and Chrysalis Investments
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Chrysalis Investments 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 Chrysalis Investments 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 Chrysalis Investments, you can compare the effects of market volatilities on Fresenius Medical and Chrysalis Investments 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 Chrysalis Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Chrysalis Investments.
Diversification Opportunities for Fresenius Medical and Chrysalis Investments
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fresenius and Chrysalis is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Chrysalis Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chrysalis Investments 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 Chrysalis Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chrysalis Investments has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Chrysalis Investments go up and down completely randomly.
Pair Corralation between Fresenius Medical and Chrysalis Investments
Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 0.99 times more return on investment than Chrysalis Investments. However, Fresenius Medical Care is 1.01 times less risky than Chrysalis Investments. It trades about 0.2 of its potential returns per unit of risk. Chrysalis Investments is currently generating about 0.15 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresenius Medical Care vs. Chrysalis Investments
Performance |
| Timeline |
| Fresenius Medical Care |
| Chrysalis Investments |
Fresenius Medical and Chrysalis Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Chrysalis Investments
The main advantage of trading using opposite Fresenius Medical and Chrysalis Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Chrysalis Investments 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 Chrysalis Investments will offset losses from the drop in Chrysalis Investments' 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 |
| Chrysalis Investments vs. Odfjell Drilling | Chrysalis Investments vs. FC Investment Trust | Chrysalis Investments vs. Mobius Investment Trust | Chrysalis Investments vs. JPMorgan Japanese Investment |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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