Correlation Between Siemens Healthineers and Aptiv PLC

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

Diversification Opportunities for Siemens Healthineers and Aptiv PLC

0.34

Correlation Coefficient

Siemens Healthineers  Aptiv PLC

Weak diversification

The 3 months correlation between Siemens and Aptiv is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Healthineers AG and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC 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 Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of Siemens Healthineers i.e., Siemens Healthineers and Aptiv PLC go up and down completely randomly.

Pair Corralation between Siemens Healthineers and Aptiv PLC

Assuming the 90 days horizon Siemens Healthineers AG is expected to generate 0.54 times more return on investment than Aptiv PLC. However, Siemens Healthineers AG is 1.86 times less risky than Aptiv PLC. It trades about 0.01 of its potential returns per unit of risk. Aptiv PLC is currently generating about -0.07 per unit of risk. If you would invest  5,134  in Siemens Healthineers AG on October 9, 2024 and sell it today you would lose (2.00) from holding Siemens Healthineers AG or give up 0.04% of portfolio value over 90 days.

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

Siemens Healthineers AG  vs.  Aptiv PLC

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. Despite nearly stable basic indicators, Siemens Healthineers is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Aptiv PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptiv PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Siemens Healthineers and Aptiv PLC

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

The idea behind Siemens Healthineers AG and Aptiv PLC 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.