Correlation Between Fresenius and Fuchs Petrolub

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

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

Diversification Opportunities for Fresenius and Fuchs Petrolub

-0.28

Correlation Coefficient

Fresenius  Fuchs Petrolub

Very good diversification

The 3 months correlation between Fresenius and Fuchs is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius SE Co and Fuchs Petrolub SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuchs Petrolub SE and Fresenius 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 SE Co are associated (or correlated) with Fuchs Petrolub. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuchs Petrolub SE has no effect on the direction of Fresenius i.e., Fresenius and Fuchs Petrolub go up and down completely randomly.

Pair Corralation between Fresenius and Fuchs Petrolub

Assuming the 90 days horizon Fresenius SE Co is expected to under-perform the Fuchs Petrolub. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fresenius SE Co is 1.23 times less risky than Fuchs Petrolub. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Fuchs Petrolub SE is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,051  in Fuchs Petrolub SE on September 1, 2024 and sell it today you would earn a total of  63.00  from holding Fuchs Petrolub SE or generate 5.99% return on investment over 90 days.

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

Fresenius SE Co  vs.  Fuchs Petrolub SE

Fresenius SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fresenius SE Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Fresenius is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fuchs Petrolub SE

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fuchs Petrolub SE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Fuchs Petrolub may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Fresenius and Fuchs Petrolub

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

The idea behind Fresenius SE Co and Fuchs Petrolub SE 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 Commodity Directory module to find actively traded commodities issued by global exchanges.