Correlation Between Advanced Medical and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both Advanced Medical and Fresenius 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 Advanced Medical and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Medical Solutions and Fresenius Medical Care, you can compare the effects of market volatilities on Advanced Medical and Fresenius 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 Advanced Medical with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Medical and Fresenius Medical.
Diversification Opportunities for Advanced Medical and Fresenius Medical
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advanced and Fresenius is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and Fresenius Medical Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius Medical Care and Advanced 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 Advanced Medical Solutions are associated (or correlated) with Fresenius Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius Medical Care has no effect on the direction of Advanced Medical i.e., Advanced Medical and Fresenius Medical go up and down completely randomly.
Pair Corralation between Advanced Medical and Fresenius Medical
Assuming the 90 days trading horizon Advanced Medical Solutions is expected to generate 3.78 times more return on investment than Fresenius Medical. However, Advanced Medical is 3.78 times more volatile than Fresenius Medical Care. It trades about 0.22 of its potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.12 per unit of risk. If you would invest 19,180 in Advanced Medical Solutions on October 20, 2024 and sell it today you would earn a total of 2,920 from holding Advanced Medical Solutions or generate 15.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Medical Solutions vs. Fresenius Medical Care
Performance |
| Timeline |
| Advanced Medical Sol |
| Fresenius Medical Care |
Advanced Medical and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Medical and Fresenius Medical
The main advantage of trading using opposite Advanced Medical and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Medical position performs unexpectedly, Fresenius 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 Fresenius Medical will offset losses from the drop in Fresenius Medical's long position.| Advanced Medical vs. Moneta Money Bank | Advanced Medical vs. Metro Bank PLC | Advanced Medical vs. UNIQA Insurance Group | Advanced Medical vs. Ally Financial |
| Fresenius Medical vs. Cornish Metals | Fresenius Medical vs. Southwest Airlines Co | Fresenius Medical vs. Synthomer plc | Fresenius Medical vs. DFS Furniture PLC |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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