Correlation Between Fresenius and Universal Health

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

Diversification Opportunities for Fresenius and Universal Health

0.35

Correlation Coefficient

Fresenius  Universal Health

Weak diversification

The 3 months correlation between Fresenius and Universal is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius SE Co and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services 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 Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Services has no effect on the direction of Fresenius i.e., Fresenius and Universal Health go up and down completely randomly.

Pair Corralation between Fresenius and Universal Health

Assuming the 90 days horizon Fresenius SE Co is expected to generate 0.54 times more return on investment than Universal Health. However, Fresenius SE Co is 1.84 times less risky than Universal Health. It trades about 0.09 of its potential returns per unit of risk. Universal Health Services is currently generating about 0.0 per unit of risk. If you would invest  3,908  in Fresenius SE Co on April 24, 2025 and sell it today you would earn a total of  282.00  from holding Fresenius SE Co or generate 7.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Fresenius SE Co  vs.  Universal Health Services

Fresenius SE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fresenius SE Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fresenius may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Universal Health Services

Risk-Adjusted Performance

Weak

Over the last 90 days Universal Health Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Universal Health is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fresenius and Universal Health

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

The idea behind Fresenius SE Co and Universal Health Services 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.