Correlation Between Cleanaway Waste and Fresenius Medical

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

By analyzing existing cross correlation between Cleanaway Waste Management and Fresenius Medical Care, you can compare the effects of market volatilities on Cleanaway Waste and Fresenius Medical 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 Cleanaway Waste with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cleanaway Waste and Fresenius Medical.

Diversification Opportunities for Cleanaway Waste and Fresenius Medical

0.31

Correlation Coefficient

Cleanaway Waste  Fresenius Medical

Weak diversification

The 3 months correlation between Cleanaway and Fresenius is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cleanaway Waste Management and Fresenius Medical Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius Medical Care and Cleanaway Waste 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 Cleanaway Waste Management are associated (or correlated) with Fresenius Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius Medical Care has no effect on the direction of Cleanaway Waste i.e., Cleanaway Waste and Fresenius Medical go up and down completely randomly.

Pair Corralation between Cleanaway Waste and Fresenius Medical

Assuming the 90 days trading horizon Cleanaway Waste is expected to generate 4.44 times less return on investment than Fresenius Medical. In addition to that, Cleanaway Waste is 1.48 times more volatile than Fresenius Medical Care. It trades about 0.0 of its total potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.02 per unit of volatility. If you would invest  4,430  in Fresenius Medical Care on December 25, 2024 and sell it today you would earn a total of  50.00  from holding Fresenius Medical Care or generate 1.13% return on investment over 90 days.

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

Cleanaway Waste Management  vs.  Fresenius Medical Care

Cleanaway Waste Mana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cleanaway Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cleanaway Waste is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Fresenius Medical Care

Risk-Adjusted Performance

Weak

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

Pair Trading with Cleanaway Waste and Fresenius Medical

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

The idea behind Cleanaway Waste Management and Fresenius Medical Care 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.