Correlation Between Shanghai Electric and Siemens AG
Can any of the company-specific risk be diversified away by investing in both Shanghai Electric 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 Shanghai Electric and Siemens AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shanghai Electric Group and Siemens AG ADR, you can compare the effects of market volatilities on Shanghai Electric 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 Shanghai Electric with a short position of Siemens AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Electric and Siemens AG.
Diversification Opportunities for Shanghai Electric and Siemens AG
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shanghai and Siemens is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Electric Group and Siemens AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens AG ADR and Shanghai Electric 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 Shanghai Electric 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 ADR has no effect on the direction of Shanghai Electric i.e., Shanghai Electric and Siemens AG go up and down completely randomly.
Pair Corralation between Shanghai Electric and Siemens AG
If you would invest 466.00 in Shanghai Electric Group on September 1, 2024 and sell it today you would earn a total of 297.00 from holding Shanghai Electric Group or generate 63.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 0.22% |
| Values | Daily Returns |
Shanghai Electric Group vs. Siemens AG ADR
Performance |
| Timeline |
| Shanghai Electric |
| Siemens AG ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shanghai Electric and Siemens AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Electric and Siemens AG
The main advantage of trading using opposite Shanghai Electric and Siemens AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Electric 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.| Shanghai Electric vs. Xinjiang Goldwind Science | Shanghai Electric vs. American Superconductor | Shanghai Electric vs. Cummins |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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