Correlation Between Bitcoin and Siemens

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

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

Diversification Opportunities for Bitcoin and Siemens

0.01

Correlation Coefficient

Bitcoin  Siemens

Significant diversification

The 3 months correlation between Bitcoin and Siemens is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Siemens Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Limited and Bitcoin 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 Bitcoin are associated (or correlated) with Siemens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Limited has no effect on the direction of Bitcoin i.e., Bitcoin and Siemens go up and down completely randomly.

Pair Corralation between Bitcoin and Siemens

Assuming the 90 days trading horizon Bitcoin is expected to generate 4.31 times more return on investment than Siemens. However, Bitcoin is 4.31 times more volatile than Siemens Limited. It trades about 0.09 of its potential returns per unit of risk. Siemens Limited is currently generating about 0.08 per unit of risk. If you would invest  2,325,278  in Bitcoin on October 26, 2024 and sell it today you would earn a total of  8,135,722  from holding Bitcoin or generate 349.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	61.07%
Values	Daily Returns

Bitcoin  vs.  Siemens Limited

Bitcoin

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Siemens Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siemens Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Bitcoin and Siemens

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

The idea behind Bitcoin and Siemens Limited 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.