Correlation Between Sims Metal and Siemens Healthineers
Can any of the company-specific risk be diversified away by investing in both Sims Metal 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 Sims Metal and Siemens Healthineers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sims Metal Management and Siemens Healthineers AG, you can compare the effects of market volatilities on Sims Metal 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 Sims Metal with a short position of Siemens Healthineers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and Siemens Healthineers.
Diversification Opportunities for Sims Metal and Siemens Healthineers
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sims and Siemens is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and Siemens Healthineers AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Healthineers and Sims Metal 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 Sims Metal Management 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 Sims Metal i.e., Sims Metal and Siemens Healthineers go up and down completely randomly.
Pair Corralation between Sims Metal and Siemens Healthineers
Assuming the 90 days horizon Sims Metal Management is expected to generate 1.74 times more return on investment than Siemens Healthineers. However, Sims Metal is 1.74 times more volatile than Siemens Healthineers AG. It trades about 0.2 of its potential returns per unit of risk. Siemens Healthineers AG is currently generating about 0.31 per unit of risk. If you would invest 710.00 in Sims Metal Management on November 3, 2024 and sell it today you would earn a total of 65.00 from holding Sims Metal Management or generate 9.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sims Metal Management vs. Siemens Healthineers AG
Performance |
| Timeline |
| Sims Metal Management |
| Siemens Healthineers |
Sims Metal and Siemens Healthineers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and Siemens Healthineers
The main advantage of trading using opposite Sims Metal and Siemens Healthineers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal 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.| Sims Metal vs. De Grey Mining | Sims Metal vs. Linedata Services SA | Sims Metal vs. GRIFFIN MINING LTD | Sims Metal vs. PUBLIC STORAGE PRFO |
| Siemens Healthineers vs. SILICON LABORATOR | Siemens Healthineers vs. KINGBOARD CHEMICAL | Siemens Healthineers vs. Tower One Wireless | Siemens Healthineers vs. Siamgas And Petrochemicals |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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