Correlation Between Siemens AG and Crane

Can any of the company-specific risk be diversified away by investing in both Siemens AG and Crane 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 Crane 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 Crane Company, you can compare the effects of market volatilities on Siemens AG and Crane 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 Crane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siemens AG and Crane.

Diversification Opportunities for Siemens AG and Crane

0.17

Correlation Coefficient

Siemens AG  Crane

Average diversification

The 3 months correlation between Siemens and Crane is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Siemens AG Class and Crane Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane Company 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 Crane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Company has no effect on the direction of Siemens AG i.e., Siemens AG and Crane go up and down completely randomly.

Pair Corralation between Siemens AG and Crane

Assuming the 90 days horizon Siemens AG is expected to generate 2.06 times less return on investment than Crane. In addition to that, Siemens AG is 1.06 times more volatile than Crane Company. It trades about 0.07 of its total potential returns per unit of risk. Crane Company is currently generating about 0.16 per unit of volatility. If you would invest  15,072  in Crane Company on September 4, 2024 and sell it today you would earn a total of  3,052  from holding Crane Company or generate 20.25% return on investment over 90 days.

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

Siemens AG Class  vs.  Crane Company

Siemens AG Class

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Siemens AG Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Siemens AG may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Crane Company

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Crane Company are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Crane reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Siemens AG and Crane

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

The idea behind Siemens AG Class and Crane Company 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.