Correlation Between G8 EDUCATION and SIEMENS HEALTH
Can any of the company-specific risk be diversified away by investing in both G8 EDUCATION and SIEMENS HEALTH 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 G8 EDUCATION and SIEMENS HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G8 EDUCATION and SIEMENS HEALTH ADR050, you can compare the effects of market volatilities on G8 EDUCATION and SIEMENS HEALTH 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 G8 EDUCATION with a short position of SIEMENS HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 EDUCATION and SIEMENS HEALTH.
Diversification Opportunities for G8 EDUCATION and SIEMENS HEALTH
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 3EAG and SIEMENS is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding G8 EDUCATION and SIEMENS HEALTH ADR050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIEMENS HEALTH ADR050 and G8 EDUCATION 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 G8 EDUCATION are associated (or correlated) with SIEMENS HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIEMENS HEALTH ADR050 has no effect on the direction of G8 EDUCATION i.e., G8 EDUCATION and SIEMENS HEALTH go up and down completely randomly.
Pair Corralation between G8 EDUCATION and SIEMENS HEALTH
Assuming the 90 days trading horizon G8 EDUCATION is expected to generate 1.05 times more return on investment than SIEMENS HEALTH. However, G8 EDUCATION is 1.05 times more volatile than SIEMENS HEALTH ADR050. It trades about 0.09 of its potential returns per unit of risk. SIEMENS HEALTH ADR050 is currently generating about 0.03 per unit of risk. If you would invest 55.00 in G8 EDUCATION on September 14, 2024 and sell it today you would earn a total of 28.00 from holding G8 EDUCATION or generate 50.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G8 EDUCATION vs. SIEMENS HEALTH ADR050
Performance |
| Timeline |
| G8 EDUCATION |
| SIEMENS HEALTH ADR050 |
G8 EDUCATION and SIEMENS HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G8 EDUCATION and SIEMENS HEALTH
The main advantage of trading using opposite G8 EDUCATION and SIEMENS HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 EDUCATION position performs unexpectedly, SIEMENS HEALTH 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 HEALTH will offset losses from the drop in SIEMENS HEALTH's long position.| G8 EDUCATION vs. Harmony Gold Mining | G8 EDUCATION vs. Lion One Metals | G8 EDUCATION vs. SEI INVESTMENTS | G8 EDUCATION vs. HK Electric Investments |
| SIEMENS HEALTH vs. LION ONE METALS | SIEMENS HEALTH vs. G8 EDUCATION | SIEMENS HEALTH vs. IMPERIAL TOBACCO | SIEMENS HEALTH vs. GREENX METALS LTD |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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