Correlation Between Allianz SE and Baloise Holding

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

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

Diversification Opportunities for Allianz SE and Baloise Holding

0.38

Correlation Coefficient

Allianz SE  Baloise Holding

Weak diversification

The 3 months correlation between Allianz and Baloise is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Allianz SE and Baloise Holding Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baloise Holding and Allianz SE 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 Allianz SE are associated (or correlated) with Baloise Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baloise Holding has no effect on the direction of Allianz SE i.e., Allianz SE and Baloise Holding go up and down completely randomly.

Pair Corralation between Allianz SE and Baloise Holding

Assuming the 90 days horizon Allianz SE is expected to generate 2.53 times less return on investment than Baloise Holding. In addition to that, Allianz SE is 1.27 times more volatile than Baloise Holding Ltd. It trades about 0.07 of its total potential returns per unit of risk. Baloise Holding Ltd is currently generating about 0.21 per unit of volatility. If you would invest  1,757  in Baloise Holding Ltd on September 15, 2024 and sell it today you would earn a total of  143.00  from holding Baloise Holding Ltd or generate 8.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Allianz SE  vs.  Baloise Holding Ltd

Allianz SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allianz SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Allianz SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Baloise Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baloise Holding Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Baloise Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allianz SE and Baloise Holding

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

The idea behind Allianz SE and Baloise Holding Ltd 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.