Correlation Between Allianz SE and Takara Holdings

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

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

Diversification Opportunities for Allianz SE and Takara Holdings

0.08

Correlation Coefficient

Allianz SE  Takara Holdings

Significant diversification

The 3 months correlation between Allianz and Takara is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Allianz SE and Takara Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takara Holdings 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 Takara Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Takara Holdings has no effect on the direction of Allianz SE i.e., Allianz SE and Takara Holdings go up and down completely randomly.

Pair Corralation between Allianz SE and Takara Holdings

Assuming the 90 days horizon Allianz SE is expected to generate 0.56 times more return on investment than Takara Holdings. However, Allianz SE is 1.8 times less risky than Takara Holdings. It trades about 0.1 of its potential returns per unit of risk. Takara Holdings is currently generating about 0.02 per unit of risk. If you would invest  19,645  in Allianz SE on September 4, 2024 and sell it today you would earn a total of  9,925  from holding Allianz SE or generate 50.52% return on investment over 90 days.

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

Allianz SE  vs.  Takara Holdings

Allianz SE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz SE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Allianz SE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Takara Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Takara Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Takara Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Allianz SE and Takara Holdings

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

The idea behind Allianz SE and Takara Holdings 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 CEOs Directory module to screen CEOs from public companies around the world.