Correlation Between Siemens AG and Daifuku

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

Diversification Opportunities for Siemens AG and Daifuku

-0.32

Correlation Coefficient

Siemens AG  Daifuku

Very good diversification

The 3 months correlation between Siemens and Daifuku is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Siemens AG Class and Daifuku Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daifuku 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 Daifuku. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daifuku has no effect on the direction of Siemens AG i.e., Siemens AG and Daifuku go up and down completely randomly.

Pair Corralation between Siemens AG and Daifuku

Assuming the 90 days horizon Siemens AG is expected to generate 18.79 times less return on investment than Daifuku. But when comparing it to its historical volatility, Siemens AG Class is 40.17 times less risky than Daifuku. It trades about 0.06 of its potential returns per unit of risk. Daifuku Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,878  in Daifuku Co on September 13, 2024 and sell it today you would lose (3,254) from holding Daifuku Co or give up 66.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	38.06%
Values	Daily Returns

Siemens AG Class  vs.  Daifuku Co

Siemens AG Class

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Siemens AG Class are ranked lower than 8 (%) 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.

Daifuku

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daifuku Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Daifuku is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Siemens AG and Daifuku

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

The idea behind Siemens AG Class and Daifuku Co 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.