Correlation Between Allianz Technology and Odfjell Drilling

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

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

Diversification Opportunities for Allianz Technology and Odfjell Drilling

-0.23

Correlation Coefficient

Allianz Technology  Odfjell Drilling

Very good diversification

The 3 months correlation between Allianz and Odfjell is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Allianz Technology Trust and Odfjell Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell Drilling and Allianz Technology 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 Technology Trust are associated (or correlated) with Odfjell Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell Drilling has no effect on the direction of Allianz Technology i.e., Allianz Technology and Odfjell Drilling go up and down completely randomly.

Pair Corralation between Allianz Technology and Odfjell Drilling

Assuming the 90 days trading horizon Allianz Technology Trust is expected to generate 0.82 times more return on investment than Odfjell Drilling. However, Allianz Technology Trust is 1.22 times less risky than Odfjell Drilling. It trades about 0.16 of its potential returns per unit of risk. Odfjell Drilling is currently generating about -0.07 per unit of risk. If you would invest  33,900  in Allianz Technology Trust on September 3, 2024 and sell it today you would earn a total of  5,850  from holding Allianz Technology Trust or generate 17.26% return on investment over 90 days.

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

Allianz Technology Trust  vs.  Odfjell Drilling

Allianz Technology Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz Technology Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Allianz Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Odfjell Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Odfjell Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Allianz Technology and Odfjell Drilling

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

The idea behind Allianz Technology Trust and Odfjell Drilling 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.