Correlation Between Allianz Technology and Malvern International

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

Diversification Opportunities for Allianz Technology and Malvern International

0.24

Correlation Coefficient

Allianz Technology  Malvern International

Modest diversification

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

Pair Corralation between Allianz Technology and Malvern International

Assuming the 90 days trading horizon Allianz Technology Trust is expected to under-perform the Malvern International. But the stock apears to be less risky and, when comparing its historical volatility, Allianz Technology Trust is 1.07 times less risky than Malvern International. The stock trades about -0.09 of its potential returns per unit of risk. The Malvern International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,950  in Malvern International on December 23, 2024 and sell it today you would earn a total of  125.00  from holding Malvern International or generate 6.41% return on investment over 90 days.

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

Allianz Technology Trust  vs.  Malvern International

Allianz Technology Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allianz Technology Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Malvern International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Malvern International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Malvern International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Allianz Technology and Malvern International

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

The idea behind Allianz Technology Trust and Malvern International 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.