Correlation Between Siemens Aktiengesellscha and S A P

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

By analyzing existing cross correlation between Siemens Aktiengesellschaft and SAP SE, you can compare the effects of market volatilities on Siemens Aktiengesellscha and S A P 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 S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siemens Aktiengesellscha and S A P.

Diversification Opportunities for Siemens Aktiengesellscha and S A P

0.28

Correlation Coefficient

Siemens Aktiengesellscha  S A P

Modest diversification

The 3 months correlation between Siemens and SAP is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Aktiengesellschaft and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE 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 S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of Siemens Aktiengesellscha i.e., Siemens Aktiengesellscha and S A P go up and down completely randomly.

Pair Corralation between Siemens Aktiengesellscha and S A P

Assuming the 90 days horizon Siemens Aktiengesellschaft is expected to generate 1.06 times more return on investment than S A P. However, Siemens Aktiengesellscha is 1.06 times more volatile than SAP SE. It trades about 0.17 of its potential returns per unit of risk. SAP SE is currently generating about 0.06 per unit of risk. If you would invest  18,504  in Siemens Aktiengesellschaft on December 29, 2024 and sell it today you would earn a total of  3,571  from holding Siemens Aktiengesellschaft or generate 19.3% return on investment over 90 days.

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

Siemens Aktiengesellschaft  vs.  SAP SE

Siemens Aktiengesellscha

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Siemens Aktiengesellschaft are ranked lower than 13 (%) 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.

SAP SE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, S A P may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Siemens Aktiengesellscha and S A P

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

The idea behind Siemens Aktiengesellschaft and SAP SE 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.