Correlation Between SMA Solar and SIEMENS ENERGY
Can any of the company-specific risk be diversified away by investing in both SMA Solar and SIEMENS ENERGY 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 SMA Solar and SIEMENS ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and SIEMENS ENERGY AG, you can compare the effects of market volatilities on SMA Solar and SIEMENS ENERGY 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 SMA Solar with a short position of SIEMENS ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and SIEMENS ENERGY.
Diversification Opportunities for SMA Solar and SIEMENS ENERGY
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SMA and SIEMENS is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and SIEMENS ENERGY AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIEMENS ENERGY AG and SMA Solar 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 SMA Solar Technology are associated (or correlated) with SIEMENS ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIEMENS ENERGY AG has no effect on the direction of SMA Solar i.e., SMA Solar and SIEMENS ENERGY go up and down completely randomly.
Pair Corralation between SMA Solar and SIEMENS ENERGY
Assuming the 90 days horizon SMA Solar Technology is expected to under-perform the SIEMENS ENERGY. In addition to that, SMA Solar is 1.61 times more volatile than SIEMENS ENERGY AG. It trades about -0.06 of its total potential returns per unit of risk. SIEMENS ENERGY AG is currently generating about 0.28 per unit of volatility. If you would invest 3,320 in SIEMENS ENERGY AG on September 26, 2024 and sell it today you would earn a total of 1,830 from holding SIEMENS ENERGY AG or generate 55.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SMA Solar Technology vs. SIEMENS ENERGY AG
Performance |
Timeline |
SMA Solar Technology |
SIEMENS ENERGY AG |
SMA Solar and SIEMENS ENERGY Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SMA Solar and SIEMENS ENERGY
The main advantage of trading using opposite SMA Solar and SIEMENS ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, SIEMENS ENERGY 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 SIEMENS ENERGY will offset losses from the drop in SIEMENS ENERGY's long position.SMA Solar vs. First Solar | SMA Solar vs. SolarEdge Technologies | SMA Solar vs. Xinyi Solar Holdings | SMA Solar vs. Sunrun Inc |
SIEMENS ENERGY vs. Siemens Energy AG | SIEMENS ENERGY vs. Datang International Power | SIEMENS ENERGY vs. Contact Energy Limited |
Check out your portfolio center.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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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