Correlation Between Fresenius and Veltex
Can any of the company-specific risk be diversified away by investing in both Fresenius and Veltex 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 and Veltex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fresenius SE Co and Veltex, you can compare the effects of market volatilities on Fresenius and Veltex 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 with a short position of Veltex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius and Veltex.
Diversification Opportunities for Fresenius and Veltex
Poor diversification
The 3 months correlation between Fresenius and Veltex is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius SE Co and Veltex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veltex and Fresenius 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 SE Co are associated (or correlated) with Veltex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veltex has no effect on the direction of Fresenius i.e., Fresenius and Veltex go up and down completely randomly.
Pair Corralation between Fresenius and Veltex
Assuming the 90 days horizon Fresenius SE Co is expected to generate 0.18 times more return on investment than Veltex. However, Fresenius SE Co is 5.68 times less risky than Veltex. It trades about -0.1 of its potential returns per unit of risk. Veltex is currently generating about -0.07 per unit of risk. If you would invest 912.00 in Fresenius SE Co on October 16, 2024 and sell it today you would lose (23.00) from holding Fresenius SE Co or give up 2.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresenius SE Co vs. Veltex
Performance |
| Timeline |
| Fresenius SE |
| Veltex |
Fresenius and Veltex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius and Veltex
The main advantage of trading using opposite Fresenius and Veltex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius position performs unexpectedly, Veltex 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 Veltex will offset losses from the drop in Veltex's long position.| Fresenius vs. Jack Nathan Medical | Fresenius vs. Medical Facilities | Fresenius vs. Ramsay Health Care | Fresenius vs. Nova Leap Health |
| Veltex vs. Concord Medical Services | Veltex vs. American Shared Hospital | Veltex vs. Sonida Senior Living | Veltex vs. Oncology Institute |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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