Correlation Between BII Railway and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both BII Railway 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 BII Railway and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and Fresenius Medical Care, you can compare the effects of market volatilities on BII Railway 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 BII Railway with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Fresenius Medical.
Diversification Opportunities for BII Railway and Fresenius Medical
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BII and Fresenius is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation 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 BII Railway 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 BII Railway Transportation 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 BII Railway i.e., BII Railway and Fresenius Medical go up and down completely randomly.
Pair Corralation between BII Railway and Fresenius Medical
Assuming the 90 days horizon BII Railway Transportation is expected to generate 1.02 times more return on investment than Fresenius Medical. However, BII Railway is 1.02 times more volatile than Fresenius Medical Care. It trades about 0.27 of its potential returns per unit of risk. Fresenius Medical Care is currently generating about -0.09 per unit of risk. If you would invest 2.60 in BII Railway Transportation on October 12, 2024 and sell it today you would earn a total of 0.20 from holding BII Railway Transportation or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. Fresenius Medical Care
Performance |
| Timeline |
| BII Railway Transpor |
| Fresenius Medical Care |
BII Railway and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and Fresenius Medical
The main advantage of trading using opposite BII Railway and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway 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.| BII Railway vs. APPLIED MATERIALS | BII Railway vs. ecotel communication ag | BII Railway vs. MOBILE FACTORY INC | BII Railway vs. Compagnie Plastic Omnium |
| Fresenius Medical vs. Iridium Communications | Fresenius Medical vs. ANTA SPORTS PRODUCT | Fresenius Medical vs. Cairo Communication SpA | Fresenius Medical vs. BII Railway Transportation |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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