Correlation Between Creo Medical and Fresenius Medical

Can any of the company-specific risk be diversified away by investing in both Creo Medical 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 Creo Medical and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Creo Medical Group and Fresenius Medical Care, you can compare the effects of market volatilities on Creo Medical 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 Creo Medical with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Creo Medical and Fresenius Medical.

Diversification Opportunities for Creo Medical and Fresenius Medical

-0.73

Correlation Coefficient

Creo Medical  Fresenius Medical

Pay attention - limited upside

The 3 months correlation between Creo and Fresenius is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Creo Medical Group 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 Creo 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 Creo Medical Group 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 Creo Medical i.e., Creo Medical and Fresenius Medical go up and down completely randomly.

Pair Corralation between Creo Medical and Fresenius Medical

Assuming the 90 days trading horizon Creo Medical Group is expected to under-perform the Fresenius Medical. In addition to that, Creo Medical is 1.86 times more volatile than Fresenius Medical Care. It trades about -0.26 of its total potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.21 per unit of volatility. If you would invest  3,503  in Fresenius Medical Care on September 4, 2024 and sell it today you would earn a total of  934.00  from holding Fresenius Medical Care or generate 26.66% return on investment over 90 days.

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

Creo Medical Group  vs.  Fresenius Medical Care

Creo Medical Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Creo Medical Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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.

Pair Trading with Creo Medical and Fresenius Medical

The main advantage of trading using opposite Creo Medical and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Creo Medical 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.

The idea behind Creo Medical Group and Fresenius Medical Care 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.