Correlation Between CompuGroup Medical and Fresenius Medical

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

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

Diversification Opportunities for CompuGroup Medical and Fresenius Medical

0.46

Correlation Coefficient

CompuGroup Medical  Fresenius Medical

Very weak diversification

The 3 months correlation between CompuGroup and Fresenius is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical AG 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 CompuGroup 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 CompuGroup Medical AG 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 CompuGroup Medical i.e., CompuGroup Medical and Fresenius Medical go up and down completely randomly.

Pair Corralation between CompuGroup Medical and Fresenius Medical

Assuming the 90 days trading horizon CompuGroup Medical is expected to generate 3.05 times less return on investment than Fresenius Medical. In addition to that, CompuGroup Medical is 1.17 times more volatile than Fresenius Medical Care. It trades about 0.05 of its total potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.19 per unit of volatility. If you would invest  3,503  in Fresenius Medical Care on September 4, 2024 and sell it today you would earn a total of  805.00  from holding Fresenius Medical Care or generate 22.98% return on investment over 90 days.

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

CompuGroup Medical AG  vs.  Fresenius Medical Care

CompuGroup Medical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CompuGroup Medical AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CompuGroup Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fresenius Medical Care

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fresenius Medical Care are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fresenius Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CompuGroup Medical and Fresenius Medical

The main advantage of trading using opposite CompuGroup Medical and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompuGroup Medical 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 CompuGroup Medical AG 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.