Correlation Between Fulcrum Metals and Fresenius Medical

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

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

Diversification Opportunities for Fulcrum Metals and Fresenius Medical

-0.6

Correlation Coefficient

Fulcrum Metals  Fresenius Medical

Excellent diversification

The 3 months correlation between Fulcrum and Fresenius is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Metals PLC 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 Fulcrum Metals 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 Fulcrum Metals PLC 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 Fulcrum Metals i.e., Fulcrum Metals and Fresenius Medical go up and down completely randomly.

Pair Corralation between Fulcrum Metals and Fresenius Medical

Assuming the 90 days trading horizon Fulcrum Metals PLC is expected to under-perform the Fresenius Medical. In addition to that, Fulcrum Metals is 2.11 times more volatile than Fresenius Medical Care. It trades about -0.12 of its total potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.1 per unit of volatility. If you would invest  3,592  in Fresenius Medical Care on September 23, 2024 and sell it today you would earn a total of  796.00  from holding Fresenius Medical Care or generate 22.16% return on investment over 90 days.

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

Fulcrum Metals PLC  vs.  Fresenius Medical Care

Fulcrum Metals PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fulcrum Metals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 Fulcrum Metals and Fresenius Medical

The main advantage of trading using opposite Fulcrum Metals and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fulcrum Metals 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 Fulcrum Metals PLC 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.