Correlation Between Fresenius Medical and Unifique Telecomunicaes

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

Diversification Opportunities for Fresenius Medical and Unifique Telecomunicaes

0.45

Correlation Coefficient

Fresenius Medical  Unifique Telecomunicaes

Very weak diversification

The 3 months correlation between Fresenius and Unifique is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Unifique Telecomunicaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unifique Telecomunicaes 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 Unifique Telecomunicaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unifique Telecomunicaes has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Unifique Telecomunicaes go up and down completely randomly.

Pair Corralation between Fresenius Medical and Unifique Telecomunicaes

Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 0.81 times more return on investment than Unifique Telecomunicaes. However, Fresenius Medical Care is 1.23 times less risky than Unifique Telecomunicaes. It trades about 0.04 of its potential returns per unit of risk. Unifique Telecomunicaes SA is currently generating about -0.01 per unit of risk. If you would invest  9,479  in Fresenius Medical Care on October 9, 2024 and sell it today you would earn a total of  1,466  from holding Fresenius Medical Care or generate 15.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.19%
Values	Daily Returns

Fresenius Medical Care  vs.  Unifique Telecomunicaes SA

Fresenius Medical Care

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, Fresenius Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Unifique Telecomunicaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unifique Telecomunicaes SA 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Fresenius Medical and Unifique Telecomunicaes

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

The idea behind Fresenius Medical Care and Unifique Telecomunicaes SA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.