Correlation Between Siemens Global and Siemens AG

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

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

Diversification Opportunities for Siemens Global and Siemens AG

0.0

Correlation Coefficient

Siemens Global  Siemens AG

Pay attention - limited upside

The 3 months correlation between Siemens and Siemens is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Global Growth and Siemens AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens AG ADR and Siemens Global 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 Global Growth 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 ADR has no effect on the direction of Siemens Global i.e., Siemens Global and Siemens AG go up and down completely randomly.

Pair Corralation between Siemens Global and Siemens AG

If you would invest  4.36  in Siemens AG ADR on October 23, 2024 and sell it today you would earn a total of  40.64  from holding Siemens AG ADR or generate 932.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.2%
Values	Daily Returns

Siemens Global Growth  vs.  Siemens AG ADR

Siemens Global Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siemens Global Growth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Siemens Global is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Siemens AG ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Siemens Global and Siemens AG

The main advantage of trading using opposite Siemens Global and Siemens AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siemens Global 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 Siemens Global Growth and Siemens AG ADR 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.