Correlation Between G8 EDUCATION and Allianz SE

Can any of the company-specific risk be diversified away by investing in both G8 EDUCATION and Allianz SE 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 G8 EDUCATION and Allianz SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between G8 EDUCATION and Allianz SE VNA, you can compare the effects of market volatilities on G8 EDUCATION and Allianz SE 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 G8 EDUCATION with a short position of Allianz SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 EDUCATION and Allianz SE.

Diversification Opportunities for G8 EDUCATION and Allianz SE

0.36

Correlation Coefficient

G8 EDUCATION  Allianz SE

Weak diversification

The 3 months correlation between 3EAG and Allianz is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding G8 EDUCATION and Allianz SE VNA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE VNA and G8 EDUCATION 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 G8 EDUCATION are associated (or correlated) with Allianz SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz SE VNA has no effect on the direction of G8 EDUCATION i.e., G8 EDUCATION and Allianz SE go up and down completely randomly.

Pair Corralation between G8 EDUCATION and Allianz SE

Assuming the 90 days trading horizon G8 EDUCATION is expected to under-perform the Allianz SE. In addition to that, G8 EDUCATION is 1.86 times more volatile than Allianz SE VNA. It trades about -0.06 of its total potential returns per unit of risk. Allianz SE VNA is currently generating about 0.13 per unit of volatility. If you would invest  28,950  in Allianz SE VNA on October 11, 2024 and sell it today you would earn a total of  1,210  from holding Allianz SE VNA or generate 4.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

G8 EDUCATION  vs.  Allianz SE VNA

G8 EDUCATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G8 EDUCATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Allianz SE VNA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz SE VNA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Allianz SE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with G8 EDUCATION and Allianz SE

The main advantage of trading using opposite G8 EDUCATION and Allianz SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 EDUCATION position performs unexpectedly, Allianz SE 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 Allianz SE will offset losses from the drop in Allianz SE's long position.

The idea behind G8 EDUCATION and Allianz SE VNA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.