Correlation Between SIEMENS HEALTH and Thermo Fisher

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

By analyzing existing cross correlation between SIEMENS HEALTH ADR050 and Thermo Fisher Scientific, you can compare the effects of market volatilities on SIEMENS HEALTH and Thermo Fisher 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 HEALTH with a short position of Thermo Fisher. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIEMENS HEALTH and Thermo Fisher.

Diversification Opportunities for SIEMENS HEALTH and Thermo Fisher

0.31

Correlation Coefficient

SIEMENS HEALTH  Thermo Fisher

Weak diversification

The 3 months correlation between SIEMENS and Thermo is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding SIEMENS HEALTH ADR050 and Thermo Fisher Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermo Fisher Scientific and SIEMENS HEALTH 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 HEALTH ADR050 are associated (or correlated) with Thermo Fisher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermo Fisher Scientific has no effect on the direction of SIEMENS HEALTH i.e., SIEMENS HEALTH and Thermo Fisher go up and down completely randomly.

Pair Corralation between SIEMENS HEALTH and Thermo Fisher

Assuming the 90 days trading horizon SIEMENS HEALTH ADR050 is expected to under-perform the Thermo Fisher. In addition to that, SIEMENS HEALTH is 1.43 times more volatile than Thermo Fisher Scientific. It trades about -0.02 of its total potential returns per unit of risk. Thermo Fisher Scientific is currently generating about -0.02 per unit of volatility. If you would invest  53,373  in Thermo Fisher Scientific on September 5, 2024 and sell it today you would lose (2,793) from holding Thermo Fisher Scientific or give up 5.23% of portfolio value over 90 days.

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

SIEMENS HEALTH ADR050  vs.  Thermo Fisher Scientific

SIEMENS HEALTH ADR050

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIEMENS HEALTH ADR050 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, SIEMENS HEALTH is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Thermo Fisher Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thermo Fisher Scientific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Thermo Fisher is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SIEMENS HEALTH and Thermo Fisher

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

The idea behind SIEMENS HEALTH ADR050 and Thermo Fisher Scientific 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..