Correlation Between CochLear and Siemens Healthineers
Can any of the company-specific risk be diversified away by investing in both CochLear 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 CochLear and Siemens Healthineers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CochLear Ltd ADR and Siemens Healthineers AG, you can compare the effects of market volatilities on CochLear 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 CochLear with a short position of Siemens Healthineers. Check out your portfolio center. Please also check ongoing floating volatility patterns of CochLear and Siemens Healthineers.
Diversification Opportunities for CochLear and Siemens Healthineers
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CochLear and Siemens is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding CochLear Ltd ADR and Siemens Healthineers AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Healthineers and CochLear 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 CochLear Ltd ADR 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 CochLear i.e., CochLear and Siemens Healthineers go up and down completely randomly.
Pair Corralation between CochLear and Siemens Healthineers
Assuming the 90 days horizon CochLear Ltd ADR is expected to generate 0.98 times more return on investment than Siemens Healthineers. However, CochLear Ltd ADR is 1.02 times less risky than Siemens Healthineers. It trades about 0.06 of its potential returns per unit of risk. Siemens Healthineers AG is currently generating about 0.02 per unit of risk. If you would invest 6,901 in CochLear Ltd ADR on August 30, 2024 and sell it today you would earn a total of 3,088 from holding CochLear Ltd ADR or generate 44.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CochLear Ltd ADR vs. Siemens Healthineers AG
Performance |
| Timeline |
| CochLear ADR |
| Siemens Healthineers |
CochLear and Siemens Healthineers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CochLear and Siemens Healthineers
The main advantage of trading using opposite CochLear and Siemens Healthineers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CochLear 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.| CochLear vs. Smith Nephew SNATS | CochLear vs. Integer Holdings Corp | CochLear vs. Demant AS ADR | CochLear vs. GN Store Nord |
| Siemens Healthineers vs. Brainsway | Siemens Healthineers vs. Bluejay Diagnostics | Siemens Healthineers vs. Venus Concept | Siemens Healthineers vs. Icecure Medical |
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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