Correlation Between Siemens and Thirumalai Chemicals

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

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

Diversification Opportunities for Siemens and Thirumalai Chemicals

0.94

Correlation Coefficient

Siemens  Thirumalai Chemicals

Almost no diversification

The 3 months correlation between Siemens and Thirumalai is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Limited and Thirumalai Chemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thirumalai Chemicals and Siemens 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 Limited are associated (or correlated) with Thirumalai Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thirumalai Chemicals has no effect on the direction of Siemens i.e., Siemens and Thirumalai Chemicals go up and down completely randomly.

Pair Corralation between Siemens and Thirumalai Chemicals

Assuming the 90 days trading horizon Siemens Limited is expected to generate 0.89 times more return on investment than Thirumalai Chemicals. However, Siemens Limited is 1.12 times less risky than Thirumalai Chemicals. It trades about -0.09 of its potential returns per unit of risk. Thirumalai Chemicals Limited is currently generating about -0.11 per unit of risk. If you would invest  642,035  in Siemens Limited on December 28, 2024 and sell it today you would lose (110,620) from holding Siemens Limited or give up 17.23% of portfolio value over 90 days.

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

Siemens Limited  vs.  Thirumalai Chemicals Limited

Siemens Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Siemens Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Thirumalai Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thirumalai Chemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Siemens and Thirumalai Chemicals

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

The idea behind Siemens Limited and Thirumalai Chemicals Limited 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.