Correlation Between Siemens Energy and Global Ship

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

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

Diversification Opportunities for Siemens Energy and Global Ship

-0.78

Correlation Coefficient

Siemens Energy  Global Ship

Pay attention - limited upside

The 3 months correlation between Siemens and Global is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Energy AG and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease and Siemens Energy 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 Siemens Energy AG are associated (or correlated) with Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Siemens Energy i.e., Siemens Energy and Global Ship go up and down completely randomly.

Pair Corralation between Siemens Energy and Global Ship

Assuming the 90 days horizon Siemens Energy AG is expected to generate 1.33 times more return on investment than Global Ship. However, Siemens Energy is 1.33 times more volatile than Global Ship Lease. It trades about 0.28 of its potential returns per unit of risk. Global Ship Lease is currently generating about -0.02 per unit of risk. If you would invest  3,554  in Siemens Energy AG on October 8, 2024 and sell it today you would earn a total of  1,642  from holding Siemens Energy AG or generate 46.2% return on investment over 90 days.

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

Siemens Energy AG  vs.  Global Ship Lease

Siemens Energy AG

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Siemens Energy AG are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Siemens Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Global Ship Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Ship Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Global Ship is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Siemens Energy and Global Ship

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

The idea behind Siemens Energy AG and Global Ship Lease 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.