Correlation Between SIEMENS HEALTH and DexCom

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

By analyzing existing cross correlation between SIEMENS HEALTH ADR050 and DexCom Inc, you can compare the effects of market volatilities on SIEMENS HEALTH and DexCom 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 HEALTH with a short position of DexCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIEMENS HEALTH and DexCom.

Diversification Opportunities for SIEMENS HEALTH and DexCom

-0.23

Correlation Coefficient

SIEMENS HEALTH  DexCom

Very good diversification

The 3 months correlation between SIEMENS and DexCom is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding SIEMENS HEALTH ADR050 and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc and SIEMENS HEALTH 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 HEALTH ADR050 are associated (or correlated) with DexCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DexCom Inc has no effect on the direction of SIEMENS HEALTH i.e., SIEMENS HEALTH and DexCom go up and down completely randomly.

Pair Corralation between SIEMENS HEALTH and DexCom

Assuming the 90 days trading horizon SIEMENS HEALTH ADR050 is expected to under-perform the DexCom. In addition to that, SIEMENS HEALTH is 1.01 times more volatile than DexCom Inc. It trades about -0.01 of its total potential returns per unit of risk. DexCom Inc is currently generating about 0.14 per unit of volatility. If you would invest  6,228  in DexCom Inc on September 3, 2024 and sell it today you would earn a total of  1,195  from holding DexCom Inc or generate 19.19% return on investment over 90 days.

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

SIEMENS HEALTH ADR050  vs.  DexCom Inc

SIEMENS HEALTH ADR050

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIEMENS HEALTH ADR050 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, SIEMENS HEALTH is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

DexCom Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DexCom reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIEMENS HEALTH and DexCom

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

The idea behind SIEMENS HEALTH ADR050 and DexCom Inc 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.