Correlation Between NEW MILLENNIUM and Siemens Healthineers

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Can any of the company-specific risk be diversified away by investing in both NEW MILLENNIUM 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 NEW MILLENNIUM and Siemens Healthineers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEW MILLENNIUM IRON and Siemens Healthineers AG, you can compare the effects of market volatilities on NEW MILLENNIUM 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 NEW MILLENNIUM with a short position of Siemens Healthineers. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEW MILLENNIUM and Siemens Healthineers.

Diversification Opportunities for NEW MILLENNIUM and Siemens Healthineers

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between NEW and Siemens is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding NEW MILLENNIUM IRON and Siemens Healthineers AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Healthineers and NEW MILLENNIUM 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 NEW MILLENNIUM IRON 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 NEW MILLENNIUM i.e., NEW MILLENNIUM and Siemens Healthineers go up and down completely randomly.

Pair Corralation between NEW MILLENNIUM and Siemens Healthineers

Assuming the 90 days trading horizon NEW MILLENNIUM IRON is expected to generate 1.55 times more return on investment than Siemens Healthineers. However, NEW MILLENNIUM is 1.55 times more volatile than Siemens Healthineers AG. It trades about 0.05 of its potential returns per unit of risk. Siemens Healthineers AG is currently generating about 0.04 per unit of risk. If you would invest  740.00  in NEW MILLENNIUM IRON on October 18, 2024 and sell it today you would earn a total of  55.00  from holding NEW MILLENNIUM IRON or generate 7.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

NEW MILLENNIUM IRON  vs.  Siemens Healthineers AG

 Performance 
       Timeline  
NEW MILLENNIUM IRON 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in NEW MILLENNIUM IRON are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, NEW MILLENNIUM exhibited solid returns over the last few months and may actually be approaching a breakup point.
Siemens Healthineers 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

NEW MILLENNIUM and Siemens Healthineers Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NEW MILLENNIUM and Siemens Healthineers

The main advantage of trading using opposite NEW MILLENNIUM and Siemens Healthineers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEW MILLENNIUM 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 NEW MILLENNIUM IRON 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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