Correlation Between GEA GROUP and SIEMENS AG
Can any of the company-specific risk be diversified away by investing in both GEA GROUP and SIEMENS AG 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 GEA GROUP and SIEMENS AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEA GROUP and SIEMENS AG SP, you can compare the effects of market volatilities on GEA GROUP and SIEMENS AG 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 GEA GROUP with a short position of SIEMENS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEA GROUP and SIEMENS AG.
Diversification Opportunities for GEA GROUP and SIEMENS AG
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GEA and SIEMENS is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GEA GROUP and SIEMENS AG SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIEMENS AG SP and GEA GROUP 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 GEA GROUP are associated (or correlated) with SIEMENS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIEMENS AG SP has no effect on the direction of GEA GROUP i.e., GEA GROUP and SIEMENS AG go up and down completely randomly.
Pair Corralation between GEA GROUP and SIEMENS AG
Assuming the 90 days horizon GEA GROUP is expected to generate 0.36 times more return on investment than SIEMENS AG. However, GEA GROUP is 2.79 times less risky than SIEMENS AG. It trades about 0.28 of its potential returns per unit of risk. SIEMENS AG SP is currently generating about 0.02 per unit of risk. If you would invest 4,548 in GEA GROUP on September 5, 2024 and sell it today you would earn a total of 254.00 from holding GEA GROUP or generate 5.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEA GROUP vs. SIEMENS AG SP
Performance |
| Timeline |
| GEA GROUP |
| SIEMENS AG SP |
GEA GROUP and SIEMENS AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEA GROUP and SIEMENS AG
The main advantage of trading using opposite GEA GROUP and SIEMENS AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEA GROUP position performs unexpectedly, SIEMENS AG 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 AG will offset losses from the drop in SIEMENS AG's long position.| GEA GROUP vs. SIEMENS AG SP | GEA GROUP vs. Siemens Aktiengesellschaft | GEA GROUP vs. Siemens Aktiengesellschaft | GEA GROUP vs. Otis Worldwide Corp |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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