Correlation Between Siemens Healthineers and BJs Restaurants

Can any of the company-specific risk be diversified away by investing in both Siemens Healthineers and BJs Restaurants 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 BJs Restaurants 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 BJs Restaurants, you can compare the effects of market volatilities on Siemens Healthineers and BJs Restaurants 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 BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siemens Healthineers and BJs Restaurants.

Diversification Opportunities for Siemens Healthineers and BJs Restaurants

0.04

Correlation Coefficient

Siemens Healthineers  BJs Restaurants

Significant diversification

The 3 months correlation between Siemens and BJs is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Healthineers AG and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of Siemens Healthineers i.e., Siemens Healthineers and BJs Restaurants go up and down completely randomly.

Pair Corralation between Siemens Healthineers and BJs Restaurants

Assuming the 90 days trading horizon Siemens Healthineers is expected to generate 27.75 times less return on investment than BJs Restaurants. But when comparing it to its historical volatility, Siemens Healthineers AG is 1.94 times less risky than BJs Restaurants. It trades about 0.01 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,980  in BJs Restaurants on October 10, 2024 and sell it today you would earn a total of  480.00  from holding BJs Restaurants or generate 16.11% return on investment over 90 days.

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

Siemens Healthineers AG  vs.  BJs Restaurants

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 comparatively stable essential indicators, Siemens Healthineers is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BJs Restaurants

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BJs Restaurants unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Siemens Healthineers and BJs Restaurants

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

The idea behind Siemens Healthineers AG and BJs Restaurants 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.