Correlation Between Take Two and Fresenius Medical

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

By analyzing existing cross correlation between Take Two Interactive Software and Fresenius Medical Care, you can compare the effects of market volatilities on Take Two and Fresenius 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 Take Two with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Fresenius Medical.

Diversification Opportunities for Take Two and Fresenius Medical

0.2

Correlation Coefficient

Take Two  Fresenius Medical

Modest diversification

The 3 months correlation between Take and Fresenius is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Fresenius Medical Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius Medical Care and Take Two 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 Take Two Interactive Software are associated (or correlated) with Fresenius Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius Medical Care has no effect on the direction of Take Two i.e., Take Two and Fresenius Medical go up and down completely randomly.

Pair Corralation between Take Two and Fresenius Medical

Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 1.71 times more return on investment than Fresenius Medical. However, Take Two is 1.71 times more volatile than Fresenius Medical Care. It trades about 0.08 of its potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.1 per unit of risk. If you would invest  18,804  in Take Two Interactive Software on December 2, 2024 and sell it today you would earn a total of  2,108  from holding Take Two Interactive Software or generate 11.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Take Two Interactive Software  vs.  Fresenius Medical Care

Take Two Interactive

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Take Two may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

Pair Trading with Take Two and Fresenius Medical

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

The idea behind Take Two Interactive Software and Fresenius Medical Care 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 CEOs Directory module to screen CEOs from public companies around the world.