Correlation Between GEELY AUTOMOBILE and Allianz SE

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

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

Diversification Opportunities for GEELY AUTOMOBILE and Allianz SE

0.14

Correlation Coefficient

GEELY AUTOMOBILE  Allianz SE

Average diversification

The 3 months correlation between GEELY and Allianz is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and Allianz SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE are associated (or correlated) with Allianz SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz SE has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and Allianz SE go up and down completely randomly.

Pair Corralation between GEELY AUTOMOBILE and Allianz SE

Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to under-perform the Allianz SE. In addition to that, GEELY AUTOMOBILE is 2.47 times more volatile than Allianz SE. It trades about -0.29 of its total potential returns per unit of risk. Allianz SE is currently generating about -0.09 per unit of volatility. If you would invest  30,070  in Allianz SE on October 8, 2024 and sell it today you would lose (320.00) from holding Allianz SE or give up 1.06% of portfolio value over 90 days.

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

GEELY AUTOMOBILE  vs.  Allianz SE

GEELY AUTOMOBILE

Risk-Adjusted Performance

9 of 100

OK

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

Allianz SE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Allianz SE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GEELY AUTOMOBILE and Allianz SE

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

The idea behind GEELY AUTOMOBILE and Allianz SE 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.