Correlation Between Fresenius Medical and Nomura Holdings

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

Diversification Opportunities for Fresenius Medical and Nomura Holdings

-0.74

Correlation Coefficient

Fresenius Medical  Nomura Holdings

Pay attention - limited upside

The 3 months correlation between Fresenius and Nomura is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Nomura Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings 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 Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Nomura Holdings go up and down completely randomly.

Pair Corralation between Fresenius Medical and Nomura Holdings

Assuming the 90 days trading horizon Fresenius Medical is expected to generate 2.7 times less return on investment than Nomura Holdings. But when comparing it to its historical volatility, Fresenius Medical Care is 1.2 times less risky than Nomura Holdings. It trades about 0.03 of its potential returns per unit of risk. Nomura Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,036  in Nomura Holdings on October 10, 2024 and sell it today you would earn a total of  1,572  from holding Nomura Holdings or generate 77.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	82.04%
Values	Daily Returns

Fresenius Medical Care  vs.  Nomura Holdings

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.

Nomura Holdings

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Nomura Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Nomura Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fresenius Medical and Nomura Holdings

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

The idea behind Fresenius Medical Care and Nomura Holdings 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.