Correlation Between Fresenius Medical and GreenX Metals

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

Diversification Opportunities for Fresenius Medical and GreenX Metals

0.68

Correlation Coefficient

Fresenius Medical  GreenX Metals

Poor diversification

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

Pair Corralation between Fresenius Medical and GreenX Metals

Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 0.78 times more return on investment than GreenX Metals. However, Fresenius Medical Care is 1.29 times less risky than GreenX Metals. It trades about 0.1 of its potential returns per unit of risk. GreenX Metals is currently generating about 0.07 per unit of risk. If you would invest  4,295  in Fresenius Medical Care on December 2, 2024 and sell it today you would earn a total of  336.00  from holding Fresenius Medical Care or generate 7.82% return on investment over 90 days.

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

Fresenius Medical Care  vs.  GreenX Metals

Fresenius Medical Care

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fresenius Medical Care are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Fresenius Medical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

GreenX Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GreenX Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GreenX Metals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Fresenius Medical and GreenX Metals

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

The idea behind Fresenius Medical Care and GreenX Metals 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.