Correlation Between Allianz Technology and Pressure Technologies

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

Diversification Opportunities for Allianz Technology and Pressure Technologies

0.84

Correlation Coefficient

Allianz Technology  Pressure Technologies

Very poor diversification

The 3 months correlation between Allianz and Pressure is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Allianz Technology Trust and Pressure Technologies Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pressure Technologies Plc 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 Pressure Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pressure Technologies Plc has no effect on the direction of Allianz Technology i.e., Allianz Technology and Pressure Technologies go up and down completely randomly.

Pair Corralation between Allianz Technology and Pressure Technologies

Assuming the 90 days trading horizon Allianz Technology is expected to generate 2.81 times less return on investment than Pressure Technologies. But when comparing it to its historical volatility, Allianz Technology Trust is 1.5 times less risky than Pressure Technologies. It trades about 0.09 of its potential returns per unit of risk. Pressure Technologies Plc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,550  in Pressure Technologies Plc on October 11, 2024 and sell it today you would earn a total of  200.00  from holding Pressure Technologies Plc or generate 5.63% return on investment over 90 days.

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

Allianz Technology Trust  vs.  Pressure Technologies Plc

Allianz Technology Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz Technology Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Allianz Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pressure Technologies Plc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pressure Technologies Plc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Pressure Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allianz Technology and Pressure Technologies

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

The idea behind Allianz Technology Trust and Pressure Technologies Plc 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.