Correlation Between Allianz SE and Siemens Aktiengesellscha

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

By analyzing existing cross correlation between Allianz SE and Siemens Aktiengesellschaft, you can compare the effects of market volatilities on Allianz SE and Siemens Aktiengesellscha 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 Siemens Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianz SE and Siemens Aktiengesellscha.

Diversification Opportunities for Allianz SE and Siemens Aktiengesellscha

0.92

Correlation Coefficient

Allianz SE  Siemens Aktiengesellscha

Almost no diversification

The 3 months correlation between Allianz and Siemens is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Allianz SE and Siemens Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Aktiengesellscha 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 Siemens Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Aktiengesellscha has no effect on the direction of Allianz SE i.e., Allianz SE and Siemens Aktiengesellscha go up and down completely randomly.

Pair Corralation between Allianz SE and Siemens Aktiengesellscha

Assuming the 90 days horizon Allianz SE is expected to generate 0.51 times more return on investment than Siemens Aktiengesellscha. However, Allianz SE is 1.95 times less risky than Siemens Aktiengesellscha. It trades about 0.32 of its potential returns per unit of risk. Siemens Aktiengesellschaft is currently generating about 0.14 per unit of risk. If you would invest  29,560  in Allianz SE on December 30, 2024 and sell it today you would earn a total of  5,950  from holding Allianz SE or generate 20.13% return on investment over 90 days.

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

Allianz SE  vs.  Siemens Aktiengesellschaft

Allianz SE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz SE are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Allianz SE reported solid returns over the last few months and may actually be approaching a breakup point.

Siemens Aktiengesellscha

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Siemens Aktiengesellschaft are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Siemens Aktiengesellscha reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allianz SE and Siemens Aktiengesellscha

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

The idea behind Allianz SE and Siemens Aktiengesellschaft 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.