Correlation Between SILICON LABORATOR and Fresenius

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

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

Diversification Opportunities for SILICON LABORATOR and Fresenius

0.74

Correlation Coefficient

SILICON LABORATOR  Fresenius

Poor diversification

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

Pair Corralation between SILICON LABORATOR and Fresenius

Assuming the 90 days trading horizon SILICON LABORATOR is expected to under-perform the Fresenius. In addition to that, SILICON LABORATOR is 1.84 times more volatile than Fresenius SE Co. It trades about 0.0 of its total potential returns per unit of risk. Fresenius SE Co is currently generating about 0.05 per unit of volatility. If you would invest  2,632  in Fresenius SE Co on October 24, 2024 and sell it today you would earn a total of  989.00  from holding Fresenius SE Co or generate 37.58% return on investment over 90 days.

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

SILICON LABORATOR  vs.  Fresenius SE Co

SILICON LABORATOR

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SILICON LABORATOR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, SILICON LABORATOR unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fresenius SE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fresenius SE Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Fresenius may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SILICON LABORATOR and Fresenius

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

The idea behind SILICON LABORATOR and Fresenius SE Co 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.