Correlation Between Edita Food and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both Edita Food 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 Edita Food and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edita Food Industries and Fresenius Medical Care, you can compare the effects of market volatilities on Edita Food 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 Edita Food with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edita Food and Fresenius Medical.
Diversification Opportunities for Edita Food and Fresenius Medical
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Edita and Fresenius is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Edita Food Industries 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 Edita Food 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 Edita Food Industries 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 Edita Food i.e., Edita Food and Fresenius Medical go up and down completely randomly.
Pair Corralation between Edita Food and Fresenius Medical
Assuming the 90 days trading horizon Edita Food Industries is expected to under-perform the Fresenius Medical. In addition to that, Edita Food is 2.66 times more volatile than Fresenius Medical Care. It trades about -0.21 of its total potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.14 per unit of volatility. If you would invest 3,897 in Fresenius Medical Care on August 24, 2024 and sell it today you would earn a total of 256.00 from holding Fresenius Medical Care or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Edita Food Industries vs. Fresenius Medical Care
Performance |
| Timeline |
| Edita Food Industries |
| Fresenius Medical Care |
Edita Food and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edita Food and Fresenius Medical
The main advantage of trading using opposite Edita Food and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edita Food 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.| Edita Food vs. Endeavour Mining Corp | Edita Food vs. Blackrock World Mining | Edita Food vs. Global Net Lease | Edita Food vs. Anglesey Mining |
| Fresenius Medical vs. Quadrise Plc | Fresenius Medical vs. Intuitive Investments Group | Fresenius Medical vs. European Metals Holdings | Fresenius Medical vs. Athelney Trust 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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