Correlation Between Fresenius Medical and Melco Resorts
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Melco Resorts 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 Melco Resorts 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 Melco Resorts Entertainment, you can compare the effects of market volatilities on Fresenius Medical and Melco Resorts 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 Melco Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Melco Resorts.
Diversification Opportunities for Fresenius Medical and Melco Resorts
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fresenius and Melco is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Melco Resorts Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melco Resorts Entert 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 Melco Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melco Resorts Entert has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Melco Resorts go up and down completely randomly.
Pair Corralation between Fresenius Medical and Melco Resorts
Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 2.4 times more return on investment than Melco Resorts. However, Fresenius Medical is 2.4 times more volatile than Melco Resorts Entertainment. It trades about 0.24 of its potential returns per unit of risk. Melco Resorts Entertainment is currently generating about -0.42 per unit of risk. If you would invest 10,945 in Fresenius Medical Care on October 12, 2024 and sell it today you would earn a total of 2,744 from holding Fresenius Medical Care or generate 25.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresenius Medical Care vs. Melco Resorts Entertainment
Performance |
| Timeline |
| Fresenius Medical Care |
| Melco Resorts Entert |
Fresenius Medical and Melco Resorts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Melco Resorts
The main advantage of trading using opposite Fresenius Medical and Melco Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Melco Resorts 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 Melco Resorts will offset losses from the drop in Melco Resorts' long position.| Fresenius Medical vs. Taiwan Semiconductor Manufacturing | Fresenius Medical vs. Apple Inc | Fresenius Medical vs. Alibaba Group Holding | Fresenius Medical vs. Microsoft |
| Melco Resorts vs. CVS Health | Melco Resorts vs. Molson Coors Beverage | Melco Resorts vs. Fresenius Medical Care | Melco Resorts vs. Elevance Health, |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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