Correlation Between Alfa Financial and Siemens Energy
Can any of the company-specific risk be diversified away by investing in both Alfa Financial and Siemens Energy 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 Alfa Financial and Siemens Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Financial Software and Siemens Energy AG, you can compare the effects of market volatilities on Alfa Financial and Siemens Energy 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 Alfa Financial with a short position of Siemens Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Siemens Energy.
Diversification Opportunities for Alfa Financial and Siemens Energy
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alfa and Siemens is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Siemens Energy AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Energy AG and Alfa Financial 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 Alfa Financial Software are associated (or correlated) with Siemens Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Energy AG has no effect on the direction of Alfa Financial i.e., Alfa Financial and Siemens Energy go up and down completely randomly.
Pair Corralation between Alfa Financial and Siemens Energy
Assuming the 90 days trading horizon Alfa Financial is expected to generate 2.99 times less return on investment than Siemens Energy. But when comparing it to its historical volatility, Alfa Financial Software is 1.61 times less risky than Siemens Energy. It trades about 0.04 of its potential returns per unit of risk. Siemens Energy AG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,903 in Siemens Energy AG on October 12, 2024 and sell it today you would earn a total of 3,047 from holding Siemens Energy AG or generate 160.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. Siemens Energy AG
Performance |
| Timeline |
| Alfa Financial Software |
| Siemens Energy AG |
Alfa Financial and Siemens Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and Siemens Energy
The main advantage of trading using opposite Alfa Financial and Siemens Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, Siemens Energy 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 Energy will offset losses from the drop in Siemens Energy's long position.| Alfa Financial vs. Gruppo Mutuionline SpA | Alfa Financial vs. CompuGroup Medical SE | Alfa Financial vs. ZhongAn Online P | Alfa Financial vs. PULSION Medical Systems |
| Siemens Energy vs. RYANAIR HLDGS ADR | Siemens Energy vs. Alfa Financial Software | Siemens Energy vs. Firan Technology Group | Siemens Energy vs. DELTA AIR LINES |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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