Correlation Between Sartorius Aktiengesellscha and ResMed

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

By analyzing existing cross correlation between Sartorius Aktiengesellschaft and ResMed Inc, you can compare the effects of market volatilities on Sartorius Aktiengesellscha and ResMed 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 Sartorius Aktiengesellscha with a short position of ResMed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sartorius Aktiengesellscha and ResMed.

Diversification Opportunities for Sartorius Aktiengesellscha and ResMed

-0.51

Correlation Coefficient

Sartorius Aktiengesellscha  ResMed

Excellent diversification

The 3 months correlation between Sartorius and ResMed is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sartorius Aktiengesellschaft and ResMed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ResMed Inc and Sartorius Aktiengesellscha 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 Sartorius Aktiengesellschaft are associated (or correlated) with ResMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ResMed Inc has no effect on the direction of Sartorius Aktiengesellscha i.e., Sartorius Aktiengesellscha and ResMed go up and down completely randomly.

Pair Corralation between Sartorius Aktiengesellscha and ResMed

Assuming the 90 days trading horizon Sartorius Aktiengesellscha is expected to generate 4.99 times less return on investment than ResMed. In addition to that, Sartorius Aktiengesellscha is 1.27 times more volatile than ResMed Inc. It trades about 0.01 of its total potential returns per unit of risk. ResMed Inc is currently generating about 0.09 per unit of volatility. If you would invest  12,845  in ResMed Inc on September 24, 2024 and sell it today you would earn a total of  9,375  from holding ResMed Inc or generate 72.99% return on investment over 90 days.

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

Sartorius Aktiengesellschaft  vs.  ResMed Inc

Sartorius Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sartorius Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Sartorius Aktiengesellscha is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

ResMed Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ResMed Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ResMed is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sartorius Aktiengesellscha and ResMed

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

The idea behind Sartorius Aktiengesellschaft and ResMed Inc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.