Correlation Between Alfa Laval and Fresenius
Can any of the company-specific risk be diversified away by investing in both Alfa Laval and Fresenius 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 Alfa Laval and Fresenius into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Laval AB and Fresenius SE Co, you can compare the effects of market volatilities on Alfa Laval and Fresenius 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 Alfa Laval with a short position of Fresenius. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Laval and Fresenius.
Diversification Opportunities for Alfa Laval and Fresenius
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alfa and Fresenius is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Laval AB and Fresenius SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius SE and Alfa Laval 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 Alfa Laval AB are associated (or correlated) with Fresenius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius SE has no effect on the direction of Alfa Laval i.e., Alfa Laval and Fresenius go up and down completely randomly.
Pair Corralation between Alfa Laval and Fresenius
Assuming the 90 days horizon Alfa Laval AB is expected to generate 1.17 times more return on investment than Fresenius. However, Alfa Laval is 1.17 times more volatile than Fresenius SE Co. It trades about -0.21 of its potential returns per unit of risk. Fresenius SE Co is currently generating about -0.25 per unit of risk. If you would invest 4,630 in Alfa Laval AB on August 28, 2024 and sell it today you would lose (322.00) from holding Alfa Laval AB or give up 6.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Laval AB vs. Fresenius SE Co
Performance |
| Timeline |
| Alfa Laval AB |
| Fresenius SE |
Alfa Laval and Fresenius Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Laval and Fresenius
The main advantage of trading using opposite Alfa Laval and Fresenius positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Laval position performs unexpectedly, Fresenius 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 Fresenius will offset losses from the drop in Fresenius' long position.| Alfa Laval vs. Aumann AG | Alfa Laval vs. Alfa Laval AB | Alfa Laval vs. Arista Power | Alfa Laval vs. Atlas Copco AB |
| Fresenius vs. Jack Nathan Medical | Fresenius vs. Medical Facilities | Fresenius vs. Ramsay Health Care | Fresenius vs. Nova Leap Health |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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