Correlation Between TT Electronics and Siemens Energy

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

By analyzing existing cross correlation between TT Electronics PLC and Siemens Energy AG, you can compare the effects of market volatilities on TT Electronics and Siemens Energy 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 TT Electronics with a short position of Siemens Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of TT Electronics and Siemens Energy.

Diversification Opportunities for TT Electronics and Siemens Energy

0.0

Correlation Coefficient

TT Electronics  Siemens Energy

Pay attention - limited upside

The 3 months correlation between 7TT and Siemens is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and Siemens Energy AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Energy AG and TT Electronics 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 TT Electronics PLC are associated (or correlated) with Siemens Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Energy AG has no effect on the direction of TT Electronics i.e., TT Electronics and Siemens Energy go up and down completely randomly.

Pair Corralation between TT Electronics and Siemens Energy

If you would invest  115.00  in TT Electronics PLC on October 6, 2024 and sell it today you would earn a total of  9.00  from holding TT Electronics PLC or generate 7.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

TT Electronics PLC  vs.  Siemens Energy AG

TT Electronics PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TT Electronics PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, TT Electronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Siemens Energy AG

Risk-Adjusted Performance

0 of 100

Solid

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

Pair Trading with TT Electronics and Siemens Energy

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

The idea behind TT Electronics PLC and Siemens Energy AG 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.