Correlation Between Fresenius Medical and Edita Food
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Edita Food 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 Edita Food 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 Edita Food Industries, you can compare the effects of market volatilities on Fresenius Medical and Edita Food 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 Edita Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Edita Food.
Diversification Opportunities for Fresenius Medical and Edita Food
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fresenius and Edita is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Edita Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edita Food Industries 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 Edita Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edita Food Industries has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Edita Food go up and down completely randomly.
Pair Corralation between Fresenius Medical and Edita Food
Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 0.37 times more return on investment than Edita Food. However, Fresenius Medical Care is 2.68 times less risky than Edita Food. It trades about 0.23 of its potential returns per unit of risk. Edita Food Industries is currently generating about -0.2 per unit of risk. If you would invest 3,875 in Fresenius Medical Care on August 28, 2024 and sell it today you would earn a total of 403.00 from holding Fresenius Medical Care or generate 10.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresenius Medical Care vs. Edita Food Industries
Performance |
| Timeline |
| Fresenius Medical Care |
| Edita Food Industries |
Fresenius Medical and Edita Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Edita Food
The main advantage of trading using opposite Fresenius Medical and Edita Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Edita Food 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 Edita Food will offset losses from the drop in Edita Food's long position.| Fresenius Medical vs. PPHE Hotel Group | Fresenius Medical vs. Park Hotels Resorts | Fresenius Medical vs. Electronic Arts | Fresenius Medical vs. Fidelity National Information |
| Edita Food vs. Samsung Electronics Co | Edita Food vs. Samsung Electronics Co | Edita Food vs. Hyundai Motor | Edita Food vs. Toyota Motor Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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