Correlation Between London Security and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both London Security 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 London Security and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and Fresenius Medical Care, you can compare the effects of market volatilities on London Security 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 London Security with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and Fresenius Medical.
Diversification Opportunities for London Security and Fresenius Medical
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between London and Fresenius is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc 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 London Security 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 London Security Plc 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 London Security i.e., London Security and Fresenius Medical go up and down completely randomly.
Pair Corralation between London Security and Fresenius Medical
Assuming the 90 days trading horizon London Security Plc is expected to under-perform the Fresenius Medical. In addition to that, London Security is 1.31 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 0.44 per unit of volatility. If you would invest 3,570 in Fresenius Medical Care on September 1, 2024 and sell it today you would earn a total of 581.00 from holding Fresenius Medical Care or generate 16.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
London Security Plc vs. Fresenius Medical Care
Performance |
| Timeline |
| London Security Plc |
| Fresenius Medical Care |
London Security and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and Fresenius Medical
The main advantage of trading using opposite London Security and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security 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.| London Security vs. Samsung Electronics Co | London Security vs. Samsung Electronics Co | London Security vs. Hyundai Motor | London Security vs. Toyota Motor Corp |
| Fresenius Medical vs. Uniper SE | Fresenius Medical vs. Mulberry Group PLC | Fresenius Medical vs. London Security Plc | Fresenius Medical vs. Triad Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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