Correlation Between Siemens Aktiengesellscha and Broadwind

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

By analyzing existing cross correlation between Siemens Aktiengesellschaft and Broadwind, you can compare the effects of market volatilities on Siemens Aktiengesellscha and Broadwind 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 Aktiengesellscha with a short position of Broadwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siemens Aktiengesellscha and Broadwind.

Diversification Opportunities for Siemens Aktiengesellscha and Broadwind

-0.27

Correlation Coefficient

Siemens Aktiengesellscha  Broadwind

Very good diversification

The 3 months correlation between Siemens and Broadwind is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Aktiengesellschaft and Broadwind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadwind and Siemens Aktiengesellscha 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 Aktiengesellschaft are associated (or correlated) with Broadwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadwind has no effect on the direction of Siemens Aktiengesellscha i.e., Siemens Aktiengesellscha and Broadwind go up and down completely randomly.

Pair Corralation between Siemens Aktiengesellscha and Broadwind

Assuming the 90 days horizon Siemens Aktiengesellschaft is expected to generate 0.37 times more return on investment than Broadwind. However, Siemens Aktiengesellschaft is 2.69 times less risky than Broadwind. It trades about 0.14 of its potential returns per unit of risk. Broadwind is currently generating about 0.02 per unit of risk. If you would invest  16,490  in Siemens Aktiengesellschaft on September 5, 2024 and sell it today you would earn a total of  2,206  from holding Siemens Aktiengesellschaft or generate 13.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Siemens Aktiengesellschaft  vs.  Broadwind

Siemens Aktiengesellscha

Risk-Adjusted Performance

10 of 100

OK

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

Broadwind

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Broadwind are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Broadwind 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 Aktiengesellscha and Broadwind

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

The idea behind Siemens Aktiengesellschaft and Broadwind 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.