Correlation Between Fresenius Medical and Intermediate Capital

Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Intermediate Capital 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 Intermediate Capital 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 Intermediate Capital Group, you can compare the effects of market volatilities on Fresenius Medical and Intermediate Capital 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 Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Intermediate Capital.

Diversification Opportunities for Fresenius Medical and Intermediate Capital

-0.1

Correlation Coefficient

Fresenius Medical  Intermediate Capital

Good diversification

The 3 months correlation between Fresenius and Intermediate is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Intermediate Capital go up and down completely randomly.

Pair Corralation between Fresenius Medical and Intermediate Capital

Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 0.95 times more return on investment than Intermediate Capital. However, Fresenius Medical Care is 1.05 times less risky than Intermediate Capital. It trades about 0.21 of its potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.0 per unit of risk. If you would invest  3,623  in Fresenius Medical Care on September 12, 2024 and sell it today you would earn a total of  932.00  from holding Fresenius Medical Care or generate 25.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fresenius Medical Care  vs.  Intermediate Capital Group

Fresenius Medical Care

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fresenius Medical Care are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fresenius Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Intermediate Capital

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Intermediate Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Intermediate Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fresenius Medical and Intermediate Capital

The main advantage of trading using opposite Fresenius Medical and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Intermediate Capital 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 Intermediate Capital will offset losses from the drop in Intermediate Capital's long position.

The idea behind Fresenius Medical Care and Intermediate Capital Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.