Correlation Between NEW MILLENNIUM and Fresenius

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

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

Diversification Opportunities for NEW MILLENNIUM and Fresenius

-0.58

Correlation Coefficient

NEW MILLENNIUM  Fresenius

Excellent diversification

The 3 months correlation between NEW and Fresenius is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding NEW MILLENNIUM IRON and Fresenius SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius SE and NEW MILLENNIUM 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 NEW MILLENNIUM IRON 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 NEW MILLENNIUM i.e., NEW MILLENNIUM and Fresenius go up and down completely randomly.

Pair Corralation between NEW MILLENNIUM and Fresenius

Assuming the 90 days trading horizon NEW MILLENNIUM IRON is expected to under-perform the Fresenius. In addition to that, NEW MILLENNIUM is 1.56 times more volatile than Fresenius SE Co. It trades about -0.08 of its total potential returns per unit of risk. Fresenius SE Co is currently generating about 0.21 per unit of volatility. If you would invest  3,348  in Fresenius SE Co on December 25, 2024 and sell it today you would earn a total of  648.00  from holding Fresenius SE Co or generate 19.35% return on investment over 90 days.

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

NEW MILLENNIUM IRON  vs.  Fresenius SE Co

NEW MILLENNIUM IRON

Risk-Adjusted Performance

Very Weak

Over the last 90 days NEW MILLENNIUM IRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Fresenius SE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fresenius SE Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Fresenius unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NEW MILLENNIUM and Fresenius

The main advantage of trading using opposite NEW MILLENNIUM and Fresenius positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEW MILLENNIUM 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 NEW MILLENNIUM IRON 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.