Correlation Between Siemens Healthineers and CryoLife

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

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

Diversification Opportunities for Siemens Healthineers and CryoLife

0.28

Correlation Coefficient

Siemens Healthineers  CryoLife

Modest diversification

The 3 months correlation between Siemens and CryoLife is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Healthineers AG and CryoLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CryoLife and Siemens Healthineers 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 Healthineers AG are associated (or correlated) with CryoLife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CryoLife has no effect on the direction of Siemens Healthineers i.e., Siemens Healthineers and CryoLife go up and down completely randomly.

Pair Corralation between Siemens Healthineers and CryoLife

Assuming the 90 days trading horizon Siemens Healthineers AG is expected to under-perform the CryoLife. But the stock apears to be less risky and, when comparing its historical volatility, Siemens Healthineers AG is 1.29 times less risky than CryoLife. The stock trades about -0.03 of its potential returns per unit of risk. The CryoLife is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,295  in CryoLife on September 27, 2024 and sell it today you would earn a total of  420.00  from holding CryoLife or generate 18.3% return on investment over 90 days.

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

Siemens Healthineers AG  vs.  CryoLife

Siemens Healthineers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siemens Healthineers AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Siemens Healthineers is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CryoLife

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Siemens Healthineers and CryoLife

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

The idea behind Siemens Healthineers AG and CryoLife 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.