Correlation Between Siemens Healthineers and Gevo

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

Diversification Opportunities for Siemens Healthineers and Gevo

-0.26

Correlation Coefficient

Siemens Healthineers  Gevo

Very good diversification

The 3 months correlation between Siemens and Gevo is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Healthineers AG and Gevo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gevo Inc 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 Gevo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gevo Inc has no effect on the direction of Siemens Healthineers i.e., Siemens Healthineers and Gevo go up and down completely randomly.

Pair Corralation between Siemens Healthineers and Gevo

Assuming the 90 days horizon Siemens Healthineers AG is expected to under-perform the Gevo. But the stock apears to be less risky and, when comparing its historical volatility, Siemens Healthineers AG is 11.11 times less risky than Gevo. The stock trades about -0.08 of its potential returns per unit of risk. The Gevo Inc is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  146.00  in Gevo Inc on October 8, 2024 and sell it today you would earn a total of  112.00  from holding Gevo Inc or generate 76.71% return on investment over 90 days.

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

Siemens Healthineers AG  vs.  Gevo Inc

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.

Gevo Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gevo Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Gevo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Siemens Healthineers and Gevo

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

The idea behind Siemens Healthineers AG and Gevo Inc 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.

Check out your portfolio center.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.