Correlation Between FANUC PUNSPADR and SIEMENS AG

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

By analyzing existing cross correlation between FANUC PUNSPADR 110 and SIEMENS AG SP, you can compare the effects of market volatilities on FANUC PUNSPADR 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 FANUC PUNSPADR with a short position of SIEMENS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of FANUC PUNSPADR and SIEMENS AG.

Diversification Opportunities for FANUC PUNSPADR and SIEMENS AG

0.34

Correlation Coefficient

FANUC PUNSPADR  SIEMENS AG

Weak diversification

The 3 months correlation between FANUC and SIEMENS is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding FANUC PUNSPADR 110 and SIEMENS AG SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIEMENS AG SP and FANUC PUNSPADR 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 FANUC PUNSPADR 110 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 SP has no effect on the direction of FANUC PUNSPADR i.e., FANUC PUNSPADR and SIEMENS AG go up and down completely randomly.

Pair Corralation between FANUC PUNSPADR and SIEMENS AG

Assuming the 90 days trading horizon FANUC PUNSPADR is expected to generate 3.17 times less return on investment than SIEMENS AG. But when comparing it to its historical volatility, FANUC PUNSPADR 110 is 1.26 times less risky than SIEMENS AG. It trades about 0.05 of its potential returns per unit of risk. SIEMENS AG SP is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  9,134  in SIEMENS AG SP on December 27, 2024 and sell it today you would earn a total of  1,966  from holding SIEMENS AG SP or generate 21.52% return on investment over 90 days.

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

FANUC PUNSPADR 110  vs.  SIEMENS AG SP

FANUC PUNSPADR 110

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FANUC PUNSPADR 110 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, FANUC PUNSPADR may actually be approaching a critical reversion point that can send shares even higher in April 2025.

SIEMENS AG SP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SIEMENS AG SP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, SIEMENS AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FANUC PUNSPADR and SIEMENS AG

The main advantage of trading using opposite FANUC PUNSPADR and SIEMENS AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FANUC PUNSPADR 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 FANUC PUNSPADR 110 and SIEMENS AG SP 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.