Correlation Between Siemens Energy and POLENERGIA

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

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

Diversification Opportunities for Siemens Energy and POLENERGIA

-0.11

Correlation Coefficient

Siemens Energy  POLENERGIA

Good diversification

The 3 months correlation between Siemens and POLENERGIA is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Energy AG and POLENERGIA SA ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POLENERGIA SA ZY and Siemens Energy 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 Energy AG are associated (or correlated) with POLENERGIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POLENERGIA SA ZY has no effect on the direction of Siemens Energy i.e., Siemens Energy and POLENERGIA go up and down completely randomly.

Pair Corralation between Siemens Energy and POLENERGIA

Assuming the 90 days horizon Siemens Energy AG is expected to generate 1.23 times more return on investment than POLENERGIA. However, Siemens Energy is 1.23 times more volatile than POLENERGIA SA ZY. It trades about 0.3 of its potential returns per unit of risk. POLENERGIA SA ZY is currently generating about 0.06 per unit of risk. If you would invest  3,250  in Siemens Energy AG on September 20, 2024 and sell it today you would earn a total of  1,808  from holding Siemens Energy AG or generate 55.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Siemens Energy AG  vs.  POLENERGIA SA ZY

Siemens Energy AG

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Siemens Energy AG are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Siemens Energy reported solid returns over the last few months and may actually be approaching a breakup point.

POLENERGIA SA ZY

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in POLENERGIA SA ZY are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, POLENERGIA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Siemens Energy and POLENERGIA

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

The idea behind Siemens Energy AG and POLENERGIA SA ZY 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 Global Correlations module to find global opportunities by holding instruments from different markets.