Correlation Between Secom Co and Fresenius
Can any of the company-specific risk be diversified away by investing in both Secom Co and Fresenius 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 Secom Co and Fresenius into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Secom Co Ltd and Fresenius SE Co, you can compare the effects of market volatilities on Secom Co and Fresenius 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 Secom Co with a short position of Fresenius. Check out your portfolio center. Please also check ongoing floating volatility patterns of Secom Co and Fresenius.
Diversification Opportunities for Secom Co and Fresenius
Very poor diversification
The 3 months correlation between Secom and Fresenius is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Secom Co Ltd and Fresenius SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius SE and Secom Co 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 Secom Co Ltd are associated (or correlated) with Fresenius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius SE has no effect on the direction of Secom Co i.e., Secom Co and Fresenius go up and down completely randomly.
Pair Corralation between Secom Co and Fresenius
Assuming the 90 days horizon Secom Co Ltd is expected to generate 0.96 times more return on investment than Fresenius. However, Secom Co Ltd is 1.04 times less risky than Fresenius. It trades about -0.17 of its potential returns per unit of risk. Fresenius SE Co is currently generating about -0.25 per unit of risk. If you would invest 879.00 in Secom Co Ltd on August 28, 2024 and sell it today you would lose (41.00) from holding Secom Co Ltd or give up 4.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Secom Co Ltd vs. Fresenius SE Co
Performance |
| Timeline |
| Secom Co |
| Fresenius SE |
Secom Co and Fresenius Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Secom Co and Fresenius
The main advantage of trading using opposite Secom Co and Fresenius positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Secom Co position performs unexpectedly, Fresenius 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 will offset losses from the drop in Fresenius' long position.| Secom Co vs. Mitsubishi Estate Co | Secom Co vs. Sekisui House Ltd | Secom Co vs. Daiwa House Industry | Secom Co vs. MSAD Insurance Group |
| Fresenius vs. Jack Nathan Medical | Fresenius vs. Medical Facilities | Fresenius vs. Ramsay Health Care | Fresenius vs. Nova Leap 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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