Correlation Between ATVRockN and Siemens AG

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

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

Diversification Opportunities for ATVRockN and Siemens AG

-0.4

Correlation Coefficient

ATVRockN  Siemens AG

Very good diversification

The 3 months correlation between ATVRockN and Siemens is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding ATVRockN and Siemens AG Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens AG Class and ATVRockN 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 ATVRockN are associated (or correlated) with Siemens AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens AG Class has no effect on the direction of ATVRockN i.e., ATVRockN and Siemens AG go up and down completely randomly.

Pair Corralation between ATVRockN and Siemens AG

Given the investment horizon of 90 days ATVRockN is expected to generate 1.14 times less return on investment than Siemens AG. In addition to that, ATVRockN is 4.74 times more volatile than Siemens AG Class. It trades about 0.01 of its total potential returns per unit of risk. Siemens AG Class is currently generating about 0.06 per unit of volatility. If you would invest  18,450  in Siemens AG Class on September 4, 2024 and sell it today you would earn a total of  1,243  from holding Siemens AG Class or generate 6.74% return on investment over 90 days.

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

ATVRockN  vs.  Siemens AG Class

ATVRockN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATVRockN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite uncertain basic indicators, ATVRockN may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Siemens AG Class

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Siemens AG Class are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Siemens AG may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ATVRockN and Siemens AG

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

The idea behind ATVRockN and Siemens AG Class 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.