Correlation Between Siemens Healthineers and OPKO HEALTH

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

Diversification Opportunities for Siemens Healthineers and OPKO HEALTH

0.01

Correlation Coefficient

Siemens Healthineers  OPKO HEALTH

Significant diversification

The 3 months correlation between Siemens and OPKO is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Healthineers AG and OPKO HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPKO HEALTH 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 OPKO HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPKO HEALTH has no effect on the direction of Siemens Healthineers i.e., Siemens Healthineers and OPKO HEALTH go up and down completely randomly.

Pair Corralation between Siemens Healthineers and OPKO HEALTH

Assuming the 90 days horizon Siemens Healthineers is expected to generate 3.4 times less return on investment than OPKO HEALTH. In addition to that, Siemens Healthineers is 1.02 times more volatile than OPKO HEALTH. It trades about 0.02 of its total potential returns per unit of risk. OPKO HEALTH is currently generating about 0.08 per unit of volatility. If you would invest  135.00  in OPKO HEALTH on October 22, 2024 and sell it today you would earn a total of  9.00  from holding OPKO HEALTH or generate 6.67% 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.  OPKO HEALTH

Siemens Healthineers

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Siemens Healthineers AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Siemens Healthineers is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

OPKO HEALTH

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Siemens Healthineers and OPKO HEALTH

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

The idea behind Siemens Healthineers AG and OPKO HEALTH 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.