Correlation Between Siemens AG and Alfa Laval
Can any of the company-specific risk be diversified away by investing in both Siemens AG and Alfa Laval 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 AG and Alfa Laval into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siemens AG Class and Alfa Laval AB, you can compare the effects of market volatilities on Siemens AG and Alfa Laval 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 AG with a short position of Alfa Laval. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siemens AG and Alfa Laval.
Diversification Opportunities for Siemens AG and Alfa Laval
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Siemens and Alfa is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Siemens AG Class and Alfa Laval AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Laval AB and Siemens AG 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 AG Class are associated (or correlated) with Alfa Laval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Laval AB has no effect on the direction of Siemens AG i.e., Siemens AG and Alfa Laval go up and down completely randomly.
Pair Corralation between Siemens AG and Alfa Laval
Assuming the 90 days horizon Siemens AG Class is expected to generate 1.07 times more return on investment than Alfa Laval. However, Siemens AG is 1.07 times more volatile than Alfa Laval AB. It trades about 0.05 of its potential returns per unit of risk. Alfa Laval AB is currently generating about 0.05 per unit of risk. If you would invest 13,456 in Siemens AG Class on September 3, 2024 and sell it today you would earn a total of 5,877 from holding Siemens AG Class or generate 43.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Siemens AG Class vs. Alfa Laval AB
Performance |
| Timeline |
| Siemens AG Class |
| Alfa Laval AB |
Siemens AG and Alfa Laval Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siemens AG and Alfa Laval
The main advantage of trading using opposite Siemens AG and Alfa Laval positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siemens AG position performs unexpectedly, Alfa Laval 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 Alfa Laval will offset losses from the drop in Alfa Laval's long position.| Siemens AG vs. Shapeways Holdings, Common | Siemens AG vs. JE Cleantech Holdings | Siemens AG vs. Greenland Acquisition Corp | Siemens AG vs. Laser Photonics |
| Alfa Laval vs. Aumann AG | Alfa Laval vs. Alfa Laval AB | Alfa Laval vs. Arista Power | Alfa Laval vs. Atlas Copco AB |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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