Correlation Between Siemens Healthineers and Siemens Aktiengesellscha

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

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

Diversification Opportunities for Siemens Healthineers and Siemens Aktiengesellscha

0.53

Correlation Coefficient

Siemens Healthineers  Siemens Aktiengesellscha

Very weak diversification

The 3 months correlation between Siemens and Siemens is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Healthineers AG and Siemens Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Aktiengesellscha and Siemens Healthineers 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 Healthineers AG are associated (or correlated) with Siemens Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Aktiengesellscha has no effect on the direction of Siemens Healthineers i.e., Siemens Healthineers and Siemens Aktiengesellscha go up and down completely randomly.

Pair Corralation between Siemens Healthineers and Siemens Aktiengesellscha

Assuming the 90 days trading horizon Siemens Healthineers AG is expected to generate 0.88 times more return on investment than Siemens Aktiengesellscha. However, Siemens Healthineers AG is 1.14 times less risky than Siemens Aktiengesellscha. It trades about -0.14 of its potential returns per unit of risk. Siemens Aktiengesellschaft is currently generating about -0.24 per unit of risk. If you would invest  5,204  in Siemens Healthineers AG on October 8, 2024 and sell it today you would lose (102.00) from holding Siemens Healthineers AG or give up 1.96% of portfolio value over 90 days.

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

Siemens Healthineers AG  vs.  Siemens Aktiengesellschaft

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.

Siemens Aktiengesellscha

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Siemens Aktiengesellschaft are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Siemens Aktiengesellscha may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Siemens Healthineers and Siemens Aktiengesellscha

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

The idea behind Siemens Healthineers AG and Siemens Aktiengesellschaft 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.