Correlation Between Algorand and Siemens Healthineers

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

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

Diversification Opportunities for Algorand and Siemens Healthineers

0.16

Correlation Coefficient

Algorand  Siemens Healthineers

Average diversification

The 3 months correlation between Algorand and Siemens is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and Siemens Healthineers AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Healthineers and Algorand 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 Algorand are associated (or correlated) with Siemens Healthineers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Healthineers has no effect on the direction of Algorand i.e., Algorand and Siemens Healthineers go up and down completely randomly.

Pair Corralation between Algorand and Siemens Healthineers

Assuming the 90 days trading horizon Algorand is expected to generate 5.58 times more return on investment than Siemens Healthineers. However, Algorand is 5.58 times more volatile than Siemens Healthineers AG. It trades about 0.05 of its potential returns per unit of risk. Siemens Healthineers AG is currently generating about 0.01 per unit of risk. If you would invest  28.00  in Algorand on October 10, 2024 and sell it today you would earn a total of  10.00  from holding Algorand or generate 35.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	57.53%
Values	Daily Returns

Algorand  vs.  Siemens Healthineers AG

Algorand

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Algorand are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Algorand exhibited solid returns over the last few months and may actually be approaching a breakup point.

Siemens Healthineers

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Algorand and Siemens Healthineers

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

The idea behind Algorand and Siemens Healthineers 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.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.