Correlation Between Fresenius Medical and Bumrungrad Hospital

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

Diversification Opportunities for Fresenius Medical and Bumrungrad Hospital

-0.66

Correlation Coefficient

Fresenius Medical  Bumrungrad Hospital

Excellent diversification

The 3 months correlation between Fresenius and Bumrungrad is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Bumrungrad Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumrungrad Hospital 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 Bumrungrad Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumrungrad Hospital has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Bumrungrad Hospital go up and down completely randomly.

Pair Corralation between Fresenius Medical and Bumrungrad Hospital

Assuming the 90 days horizon Fresenius Medical Care is expected to generate 0.75 times more return on investment than Bumrungrad Hospital. However, Fresenius Medical Care is 1.33 times less risky than Bumrungrad Hospital. It trades about 0.16 of its potential returns per unit of risk. Bumrungrad Hospital Public is currently generating about -0.07 per unit of risk. If you would invest  3,454  in Fresenius Medical Care on September 4, 2024 and sell it today you would earn a total of  681.00  from holding Fresenius Medical Care or generate 19.72% return on investment over 90 days.

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

Fresenius Medical Care  vs.  Bumrungrad Hospital Public

Fresenius Medical Care

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fresenius Medical Care are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fresenius Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Bumrungrad Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bumrungrad Hospital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Fresenius Medical and Bumrungrad Hospital

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

The idea behind Fresenius Medical Care and Bumrungrad Hospital Public 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.