Correlation Between BC IRON and Siemens Healthineers

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

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

Diversification Opportunities for BC IRON and Siemens Healthineers

-0.34

Correlation Coefficient

BC IRON  Siemens Healthineers

Very good diversification

The 3 months correlation between BC3 and Siemens is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding BC IRON and Siemens Healthineers AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Healthineers and BC IRON 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 BC IRON 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 BC IRON i.e., BC IRON and Siemens Healthineers go up and down completely randomly.

Pair Corralation between BC IRON and Siemens Healthineers

Assuming the 90 days trading horizon BC IRON is expected to under-perform the Siemens Healthineers. In addition to that, BC IRON is 2.52 times more volatile than Siemens Healthineers AG. It trades about -0.01 of its total potential returns per unit of risk. Siemens Healthineers AG is currently generating about 0.0 per unit of volatility. If you would invest  5,118  in Siemens Healthineers AG on October 8, 2024 and sell it today you would lose (34.00) from holding Siemens Healthineers AG or give up 0.66% of portfolio value over 90 days.

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

BC IRON  vs.  Siemens Healthineers AG

BC IRON

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 rather sound essential indicators, Siemens Healthineers is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BC IRON and Siemens Healthineers

The main advantage of trading using opposite BC IRON and Siemens Healthineers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BC IRON 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 BC IRON 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.