Correlation Between Siemens Energy and Datang International
Can any of the company-specific risk be diversified away by investing in both Siemens Energy and Datang International 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 Siemens Energy and Datang International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siemens Energy AG and Datang International Power, you can compare the effects of market volatilities on Siemens Energy and Datang International 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 Siemens Energy with a short position of Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siemens Energy and Datang International.
Diversification Opportunities for Siemens Energy and Datang International
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Siemens and Datang is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Energy AG and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International and Siemens Energy 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 Siemens Energy AG are associated (or correlated) with Datang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datang International has no effect on the direction of Siemens Energy i.e., Siemens Energy and Datang International go up and down completely randomly.
Pair Corralation between Siemens Energy and Datang International
Assuming the 90 days horizon Siemens Energy AG is expected to generate 0.9 times more return on investment than Datang International. However, Siemens Energy AG is 1.12 times less risky than Datang International. It trades about 0.11 of its potential returns per unit of risk. Datang International Power is currently generating about 0.01 per unit of risk. If you would invest 4,624 in Siemens Energy AG on September 15, 2024 and sell it today you would earn a total of 256.00 from holding Siemens Energy AG or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Siemens Energy AG vs. Datang International Power
Performance |
| Timeline |
| Siemens Energy AG |
| Datang International |
Siemens Energy and Datang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siemens Energy and Datang International
The main advantage of trading using opposite Siemens Energy and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siemens Energy position performs unexpectedly, Datang International 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 Datang International will offset losses from the drop in Datang International's long position.| Siemens Energy vs. CN YANGTPWR GDR | Siemens Energy vs. SIEMENS ENERGY AG | Siemens Energy vs. Vistra Corp | Siemens Energy vs. CENTRICA ADR NEW |
| Datang International vs. CN YANGTPWR GDR | Datang International vs. SIEMENS ENERGY AG | Datang International vs. Siemens Energy AG | Datang International vs. Vistra Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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