Correlation Between SIEMENS AG and Brockhaus Capital

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

By analyzing existing cross correlation between SIEMENS AG SP and Brockhaus Capital Management, you can compare the effects of market volatilities on SIEMENS AG and Brockhaus Capital 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 AG with a short position of Brockhaus Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIEMENS AG and Brockhaus Capital.

Diversification Opportunities for SIEMENS AG and Brockhaus Capital

-0.5

Correlation Coefficient

SIEMENS AG  Brockhaus Capital

Very good diversification

The 3 months correlation between SIEMENS and Brockhaus is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding SIEMENS AG SP and Brockhaus Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brockhaus Capital and SIEMENS AG 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 AG SP are associated (or correlated) with Brockhaus Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brockhaus Capital has no effect on the direction of SIEMENS AG i.e., SIEMENS AG and Brockhaus Capital go up and down completely randomly.

Pair Corralation between SIEMENS AG and Brockhaus Capital

Assuming the 90 days trading horizon SIEMENS AG SP is expected to generate 0.78 times more return on investment than Brockhaus Capital. However, SIEMENS AG SP is 1.29 times less risky than Brockhaus Capital. It trades about 0.19 of its potential returns per unit of risk. Brockhaus Capital Management is currently generating about -0.13 per unit of risk. If you would invest  8,000  in SIEMENS AG SP on September 12, 2024 and sell it today you would earn a total of  1,900  from holding SIEMENS AG SP or generate 23.75% return on investment over 90 days.

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

SIEMENS AG SP  vs.  Brockhaus Capital Management

SIEMENS AG SP

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SIEMENS AG SP are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, SIEMENS AG reported solid returns over the last few months and may actually be approaching a breakup point.

Brockhaus Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SIEMENS AG and Brockhaus Capital

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

The idea behind SIEMENS AG SP and Brockhaus Capital Management 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.