Correlation Between Fresenius Medical and Companhia Siderrgica
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Companhia Siderrgica 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 Fresenius Medical and Companhia Siderrgica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fresenius Medical Care and Companhia Siderrgica Nacional, you can compare the effects of market volatilities on Fresenius Medical and Companhia Siderrgica 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 Fresenius Medical with a short position of Companhia Siderrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Companhia Siderrgica.
Diversification Opportunities for Fresenius Medical and Companhia Siderrgica
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fresenius and Companhia is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Companhia Siderrgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderrgica and Fresenius 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 Fresenius Medical Care are associated (or correlated) with Companhia Siderrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderrgica has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Companhia Siderrgica go up and down completely randomly.
Pair Corralation between Fresenius Medical and Companhia Siderrgica
Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 1.01 times more return on investment than Companhia Siderrgica. However, Fresenius Medical is 1.01 times more volatile than Companhia Siderrgica Nacional. It trades about 0.11 of its potential returns per unit of risk. Companhia Siderrgica Nacional is currently generating about -0.18 per unit of risk. If you would invest 11,322 in Fresenius Medical Care on October 26, 2024 and sell it today you would earn a total of 2,367 from holding Fresenius Medical Care or generate 20.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresenius Medical Care vs. Companhia Siderrgica Nacional
Performance |
| Timeline |
| Fresenius Medical Care |
| Companhia Siderrgica |
Fresenius Medical and Companhia Siderrgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Companhia Siderrgica
The main advantage of trading using opposite Fresenius Medical and Companhia Siderrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Companhia Siderrgica 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 Companhia Siderrgica will offset losses from the drop in Companhia Siderrgica's long position.| Fresenius Medical vs. Automatic Data Processing | Fresenius Medical vs. Marfrig Global Foods | Fresenius Medical vs. G2D Investments | Fresenius Medical vs. Zoom Video Communications |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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