Correlation Between MPH Health and Siemens Healthineers
Can any of the company-specific risk be diversified away by investing in both MPH 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 MPH 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 MPH Health Care and Siemens Healthineers AG, you can compare the effects of market volatilities on MPH 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 MPH Health with a short position of Siemens Healthineers. Check out your portfolio center. Please also check ongoing floating volatility patterns of MPH Health and Siemens Healthineers.
Diversification Opportunities for MPH Health and Siemens Healthineers
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MPH and Siemens is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding MPH Health Care and Siemens Healthineers AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Healthineers and MPH 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 MPH Health Care 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 MPH Health i.e., MPH Health and Siemens Healthineers go up and down completely randomly.
Pair Corralation between MPH Health and Siemens Healthineers
Assuming the 90 days trading horizon MPH Health Care is expected to under-perform the Siemens Healthineers. But the stock apears to be less risky and, when comparing its historical volatility, MPH Health Care is 1.95 times less risky than Siemens Healthineers. The stock trades about -0.31 of its potential returns per unit of risk. The Siemens Healthineers AG is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 5,212 in Siemens Healthineers AG on November 7, 2024 and sell it today you would earn a total of 274.00 from holding Siemens Healthineers AG or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
MPH Health Care vs. Siemens Healthineers AG
Performance |
| Timeline |
| MPH Health Care |
| Siemens Healthineers |
MPH Health and Siemens Healthineers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MPH Health and Siemens Healthineers
The main advantage of trading using opposite MPH Health and Siemens Healthineers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MPH 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.| MPH Health vs. SIVERS SEMICONDUCTORS AB | MPH Health vs. NorAm Drilling AS | MPH Health vs. Volkswagen AG | MPH Health vs. Darden Restaurants |
| Siemens Healthineers vs. PLANT VEDA FOODS | Siemens Healthineers vs. PREMIER FOODS | Siemens Healthineers vs. MONEYSUPERMARKET | Siemens Healthineers vs. Tyson Foods |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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