Correlation Between Air China and Siemens Energy
Can any of the company-specific risk be diversified away by investing in both Air China 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 Air China and Siemens Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air China Limited and Siemens Energy AG, you can compare the effects of market volatilities on Air China 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 Air China with a short position of Siemens Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air China and Siemens Energy.
Diversification Opportunities for Air China and Siemens Energy
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Air and Siemens is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Air China Limited 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 Air China 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 Air China Limited 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 Air China i.e., Air China and Siemens Energy go up and down completely randomly.
Pair Corralation between Air China and Siemens Energy
Assuming the 90 days horizon Air China Limited is expected to under-perform the Siemens Energy. But the stock apears to be less risky and, when comparing its historical volatility, Air China Limited is 1.09 times less risky than Siemens Energy. The stock trades about 0.0 of its potential returns per unit of risk. The Siemens Energy AG is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,886 in Siemens Energy AG on September 1, 2024 and sell it today you would earn a total of 3,222 from holding Siemens Energy AG or generate 170.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.78% |
| Values | Daily Returns |
Air China Limited vs. Siemens Energy AG
Performance |
| Timeline |
| Air China Limited |
| Siemens Energy AG |
Air China and Siemens Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air China and Siemens Energy
The main advantage of trading using opposite Air China and Siemens Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air China 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.| Air China vs. GungHo Online Entertainment | Air China vs. CODERE ONLINE LUX | Air China vs. SERI INDUSTRIAL EO | Air China vs. SIMS METAL MGT |
| Siemens Energy vs. CENTRICA ADR NEW | Siemens Energy vs. TransAlta | Siemens Energy vs. Superior Plus Corp | Siemens Energy vs. NMI Holdings |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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