Correlation Between Fresenius and Concord Medical

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

Diversification Opportunities for Fresenius and Concord Medical

0.31

Correlation Coefficient

Fresenius  Concord Medical

Weak diversification

The 3 months correlation between Fresenius and Concord is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius SE Co and Concord Medical Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concord Medical Services 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 Concord Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concord Medical Services has no effect on the direction of Fresenius i.e., Fresenius and Concord Medical go up and down completely randomly.

Pair Corralation between Fresenius and Concord Medical

Assuming the 90 days horizon Fresenius SE Co is expected to generate 0.2 times more return on investment than Concord Medical. However, Fresenius SE Co is 4.98 times less risky than Concord Medical. It trades about -0.04 of its potential returns per unit of risk. Concord Medical Services is currently generating about -0.04 per unit of risk. If you would invest  921.00  in Fresenius SE Co on September 3, 2024 and sell it today you would lose (36.00) from holding Fresenius SE Co or give up 3.91% of portfolio value over 90 days.

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

Fresenius SE Co  vs.  Concord Medical Services

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. In spite of fairly strong basic indicators, Fresenius is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Concord Medical Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concord Medical Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Fresenius and Concord Medical

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

The idea behind Fresenius SE Co and Concord Medical Services 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.