Correlation Between Thermo Fisher and Siemens Healthineers

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

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

Diversification Opportunities for Thermo Fisher and Siemens Healthineers

0.27

Correlation Coefficient

Thermo Fisher  Siemens Healthineers

Modest diversification

The 3 months correlation between Thermo and Siemens is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Thermo Fisher Scientific and Siemens Healthineers AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Healthineers and Thermo Fisher 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 Thermo Fisher Scientific 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 Thermo Fisher i.e., Thermo Fisher and Siemens Healthineers go up and down completely randomly.

Pair Corralation between Thermo Fisher and Siemens Healthineers

Assuming the 90 days horizon Thermo Fisher is expected to generate 5.91 times less return on investment than Siemens Healthineers. In addition to that, Thermo Fisher is 1.0 times more volatile than Siemens Healthineers AG. It trades about 0.0 of its total potential returns per unit of risk. Siemens Healthineers AG is currently generating about 0.03 per unit of volatility. If you would invest  4,526  in Siemens Healthineers AG on September 24, 2024 and sell it today you would earn a total of  690.00  from holding Siemens Healthineers AG or generate 15.25% return on investment over 90 days.

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

Thermo Fisher Scientific  vs.  Siemens Healthineers AG

Thermo Fisher Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thermo Fisher Scientific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 Thermo Fisher and Siemens Healthineers

The main advantage of trading using opposite Thermo Fisher and Siemens Healthineers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermo Fisher 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 Thermo Fisher Scientific 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.