Correlation Between Chemed and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both Chemed 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 Chemed and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemed and Fresenius Medical Care, you can compare the effects of market volatilities on Chemed 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 Chemed with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemed and Fresenius Medical.
Diversification Opportunities for Chemed and Fresenius Medical
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chemed and Fresenius is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Chemed 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 Chemed 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 Chemed 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 Chemed i.e., Chemed and Fresenius Medical go up and down completely randomly.
Pair Corralation between Chemed and Fresenius Medical
Assuming the 90 days horizon Chemed is expected to generate 2.92 times less return on investment than Fresenius Medical. But when comparing it to its historical volatility, Chemed is 1.42 times less risky than Fresenius Medical. It trades about 0.01 of its potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,903 in Fresenius Medical Care on October 29, 2024 and sell it today you would earn a total of 377.00 from holding Fresenius Medical Care or generate 19.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemed vs. Fresenius Medical Care
Performance |
| Timeline |
| Chemed |
| Fresenius Medical Care |
Chemed and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemed and Fresenius Medical
The main advantage of trading using opposite Chemed and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemed 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.The idea behind Chemed and Fresenius Medical Care pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Fresenius Medical vs. BII Railway Transportation | Fresenius Medical vs. Indutrade AB | Fresenius Medical vs. DICKS Sporting Goods | Fresenius Medical vs. SCIENCE IN SPORT |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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