Correlation Between Siemens AG and ATVRockN

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

By analyzing existing cross correlation between Siemens AG Class and ATVRockN, you can compare the effects of market volatilities on Siemens AG and ATVRockN 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 ATVRockN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siemens AG and ATVRockN.

Diversification Opportunities for Siemens AG and ATVRockN

0.22

Correlation Coefficient

Siemens AG  ATVRockN

Modest diversification

The 3 months correlation between Siemens and ATVRockN is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Siemens AG Class and ATVRockN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATVRockN 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 Class are associated (or correlated) with ATVRockN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATVRockN has no effect on the direction of Siemens AG i.e., Siemens AG and ATVRockN go up and down completely randomly.

Pair Corralation between Siemens AG and ATVRockN

Assuming the 90 days horizon Siemens AG is expected to generate 3.62 times less return on investment than ATVRockN. But when comparing it to its historical volatility, Siemens AG Class is 6.2 times less risky than ATVRockN. It trades about 0.14 of its potential returns per unit of risk. ATVRockN is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.07  in ATVRockN on December 30, 2024 and sell it today you would earn a total of  0.01  from holding ATVRockN or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Siemens AG Class  vs.  ATVRockN

Siemens AG Class

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Siemens AG Class are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Siemens AG reported solid returns over the last few months and may actually be approaching a breakup point.

ATVRockN

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ATVRockN are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, ATVRockN disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Siemens AG and ATVRockN

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

The idea behind Siemens AG Class and ATVRockN 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.