Correlation Between Fresenius and Numinus Wellness

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

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

Diversification Opportunities for Fresenius and Numinus Wellness

-0.47

Correlation Coefficient

Fresenius  Numinus Wellness

Very good diversification

The 3 months correlation between Fresenius and Numinus is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius SE Co and Numinus Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Numinus Wellness and Fresenius 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 SE Co are associated (or correlated) with Numinus Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Numinus Wellness has no effect on the direction of Fresenius i.e., Fresenius and Numinus Wellness go up and down completely randomly.

Pair Corralation between Fresenius and Numinus Wellness

Assuming the 90 days horizon Fresenius SE Co is expected to under-perform the Numinus Wellness. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fresenius SE Co is 7.44 times less risky than Numinus Wellness. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Numinus Wellness is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2.10  in Numinus Wellness on September 23, 2024 and sell it today you would earn a total of  0.90  from holding Numinus Wellness or generate 42.86% return on investment over 90 days.

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

Fresenius SE Co  vs.  Numinus Wellness

Fresenius SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fresenius SE Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fresenius is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Numinus Wellness

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Numinus Wellness are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Numinus Wellness reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fresenius and Numinus Wellness

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

The idea behind Fresenius SE Co and Numinus Wellness 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 Anywhere module to track or share privately all of your investments from the convenience of any device.