Correlation Between Fresenius Medical and Johnson Matthey

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

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

Diversification Opportunities for Fresenius Medical and Johnson Matthey

0.38

Correlation Coefficient

Fresenius Medical  Johnson Matthey

Weak diversification

The 3 months correlation between Fresenius and Johnson is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Johnson Matthey PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Matthey PLC and Fresenius Medical 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 Medical Care are associated (or correlated) with Johnson Matthey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Matthey PLC has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Johnson Matthey go up and down completely randomly.

Pair Corralation between Fresenius Medical and Johnson Matthey

Assuming the 90 days trading horizon Fresenius Medical is expected to generate 4.41 times less return on investment than Johnson Matthey. But when comparing it to its historical volatility, Fresenius Medical Care is 2.55 times less risky than Johnson Matthey. It trades about 0.11 of its potential returns per unit of risk. Johnson Matthey PLC is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  121,028  in Johnson Matthey PLC on April 24, 2025 and sell it today you would earn a total of  64,572  from holding Johnson Matthey PLC or generate 53.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Fresenius Medical Care  vs.  Johnson Matthey PLC

Fresenius Medical Care

Risk-Adjusted Performance

OK

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

Johnson Matthey PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Matthey PLC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Johnson Matthey unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fresenius Medical and Johnson Matthey

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

The idea behind Fresenius Medical Care and Johnson Matthey PLC 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.