Correlation Between Fresenius Medical and US Physical

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

Diversification Opportunities for Fresenius Medical and US Physical

0.26

Correlation Coefficient

Fresenius Medical  US Physical

Modest diversification

The 3 months correlation between Fresenius and UPH is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and US Physical Therapy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Physical Therapy 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 US Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Physical Therapy has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and US Physical go up and down completely randomly.

Pair Corralation between Fresenius Medical and US Physical

Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 1.36 times more return on investment than US Physical. However, Fresenius Medical is 1.36 times more volatile than US Physical Therapy. It trades about 0.01 of its potential returns per unit of risk. US Physical Therapy is currently generating about -0.21 per unit of risk. If you would invest  2,240  in Fresenius Medical Care on December 22, 2024 and sell it today you would earn a total of  0.00  from holding Fresenius Medical Care or generate 0.0% return on investment over 90 days.

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

Fresenius Medical Care  vs.  US Physical Therapy

Fresenius Medical Care

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fresenius Medical Care has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Fresenius Medical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

US Physical Therapy

Risk-Adjusted Performance

Very Weak

Over the last 90 days US Physical Therapy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Fresenius Medical and US Physical

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

The idea behind Fresenius Medical Care and US Physical Therapy 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.