Correlation Between SIEMENS HEALTH and Siemens Healthineers

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

Diversification Opportunities for SIEMENS HEALTH and Siemens Healthineers

0.9

Correlation Coefficient

SIEMENS HEALTH  Siemens Healthineers

Almost no diversification

The 3 months correlation between SIEMENS and Siemens is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding SIEMENS HEALTH ADR050 and Siemens Healthineers AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Healthineers 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 Siemens Healthineers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Healthineers has no effect on the direction of SIEMENS HEALTH i.e., SIEMENS HEALTH and Siemens Healthineers go up and down completely randomly.

Pair Corralation between SIEMENS HEALTH and Siemens Healthineers

Assuming the 90 days trading horizon SIEMENS HEALTH ADR050 is expected to generate 1.37 times more return on investment than Siemens Healthineers. However, SIEMENS HEALTH is 1.37 times more volatile than Siemens Healthineers AG. It trades about 0.07 of its potential returns per unit of risk. Siemens Healthineers AG is currently generating about 0.07 per unit of risk. If you would invest  2,360  in SIEMENS HEALTH ADR050 on September 24, 2024 and sell it today you would earn a total of  220.00  from holding SIEMENS HEALTH ADR050 or generate 9.32% return on investment over 90 days.

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

SIEMENS HEALTH ADR050  vs.  Siemens Healthineers AG

SIEMENS HEALTH ADR050

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SIEMENS HEALTH ADR050 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, SIEMENS HEALTH may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Siemens Healthineers

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Siemens Healthineers AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Siemens Healthineers may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SIEMENS HEALTH and Siemens Healthineers

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

The idea behind SIEMENS HEALTH ADR050 and Siemens Healthineers AG 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.