Correlation Between Fresenius and Jack Nathan

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

Diversification Opportunities for Fresenius and Jack Nathan

0.04

Correlation Coefficient

Fresenius  Jack Nathan

Significant diversification

The 3 months correlation between Fresenius and Jack is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius SE Co and Jack Nathan Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jack Nathan Medical 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 Jack Nathan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jack Nathan Medical has no effect on the direction of Fresenius i.e., Fresenius and Jack Nathan go up and down completely randomly.

Pair Corralation between Fresenius and Jack Nathan

Assuming the 90 days horizon Fresenius is expected to generate 17.8 times less return on investment than Jack Nathan. But when comparing it to its historical volatility, Fresenius SE Co is 24.97 times less risky than Jack Nathan. It trades about 0.19 of its potential returns per unit of risk. Jack Nathan Medical is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2.30  in Jack Nathan Medical on November 29, 2024 and sell it today you would earn a total of  0.30  from holding Jack Nathan Medical or generate 13.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Fresenius SE Co  vs.  Jack Nathan Medical

Fresenius SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fresenius SE Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Fresenius showed solid returns over the last few months and may actually be approaching a breakup point.

Jack Nathan Medical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jack Nathan Medical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Jack Nathan reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fresenius and Jack Nathan

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

The idea behind Fresenius SE Co and Jack Nathan Medical 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.