Correlation Between Allianz Technology and TBC Bank

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

Diversification Opportunities for Allianz Technology and TBC Bank

0.6

Correlation Coefficient

Allianz Technology  TBC Bank

Poor diversification

The 3 months correlation between Allianz and TBC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Allianz Technology Trust and TBC Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TBC Bank Group 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 TBC Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TBC Bank Group has no effect on the direction of Allianz Technology i.e., Allianz Technology and TBC Bank go up and down completely randomly.

Pair Corralation between Allianz Technology and TBC Bank

Assuming the 90 days trading horizon Allianz Technology Trust is expected to generate 0.82 times more return on investment than TBC Bank. However, Allianz Technology Trust is 1.22 times less risky than TBC Bank. It trades about 0.09 of its potential returns per unit of risk. TBC Bank Group is currently generating about 0.05 per unit of risk. If you would invest  20,600  in Allianz Technology Trust on October 10, 2024 and sell it today you would earn a total of  22,000  from holding Allianz Technology Trust or generate 106.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Allianz Technology Trust  vs.  TBC Bank Group

Allianz Technology Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz Technology Trust are ranked lower than 13 (%) 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.

TBC Bank Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TBC Bank Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TBC Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allianz Technology and TBC Bank

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

The idea behind Allianz Technology Trust and TBC Bank Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.