Correlation Between Allianz Technology and Capital Drilling

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Can any of the company-specific risk be diversified away by investing in both Allianz Technology and Capital 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 Capital 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 Capital Drilling, you can compare the effects of market volatilities on Allianz Technology and Capital 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 Capital Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianz Technology and Capital Drilling.

Diversification Opportunities for Allianz Technology and Capital Drilling

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Allianz and Capital is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Allianz Technology Trust and Capital Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital 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 Capital Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Drilling has no effect on the direction of Allianz Technology i.e., Allianz Technology and Capital Drilling go up and down completely randomly.

Pair Corralation between Allianz Technology and Capital Drilling

Assuming the 90 days trading horizon Allianz Technology Trust is expected to generate 0.71 times more return on investment than Capital Drilling. However, Allianz Technology Trust is 1.41 times less risky than Capital Drilling. It trades about 0.27 of its potential returns per unit of risk. Capital Drilling is currently generating about -0.04 per unit of risk. If you would invest  36,400  in Allianz Technology Trust on September 1, 2024 and sell it today you would earn a total of  3,350  from holding Allianz Technology Trust or generate 9.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Allianz Technology Trust  vs.  Capital Drilling

 Performance 
       Timeline  
Allianz Technology Trust 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Allianz Technology Trust are ranked lower than 10 (%) 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.
Capital Drilling 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Capital Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Capital Drilling is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Allianz Technology and Capital Drilling Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Allianz Technology and Capital Drilling

The main advantage of trading using opposite Allianz Technology and Capital Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allianz Technology position performs unexpectedly, Capital 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 Capital Drilling will offset losses from the drop in Capital Drilling's long position.
The idea behind Allianz Technology Trust and Capital 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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