Correlation Between Oncology Institute and Fresenius

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

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

Diversification Opportunities for Oncology Institute and Fresenius

0.68

Correlation Coefficient

Oncology Institute  Fresenius

Poor diversification

The 3 months correlation between Oncology and Fresenius is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Oncology Institute and Fresenius SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius SE and Oncology Institute 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 Oncology Institute are associated (or correlated) with Fresenius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius SE has no effect on the direction of Oncology Institute i.e., Oncology Institute and Fresenius go up and down completely randomly.

Pair Corralation between Oncology Institute and Fresenius

Considering the 90-day investment horizon Oncology Institute is expected to under-perform the Fresenius. In addition to that, Oncology Institute is 5.96 times more volatile than Fresenius SE Co. It trades about -0.13 of its total potential returns per unit of risk. Fresenius SE Co is currently generating about -0.04 per unit of volatility. 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	Significant
Accuracy	100.0%
Values	Daily Returns

Oncology Institute  vs.  Fresenius SE Co

Oncology Institute

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oncology Institute has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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.

Pair Trading with Oncology Institute and Fresenius

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

The idea behind Oncology Institute and Fresenius SE Co 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.