Correlation Between Richardson Electronics and Allianz SE

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

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

Diversification Opportunities for Richardson Electronics and Allianz SE

-0.84

Correlation Coefficient

Richardson Electronics  Allianz SE

Pay attention - limited upside

The 3 months correlation between Richardson and Allianz is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Richardson Electronics and Allianz SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE and Richardson Electronics 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 Richardson Electronics 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 Richardson Electronics i.e., Richardson Electronics and Allianz SE go up and down completely randomly.

Pair Corralation between Richardson Electronics and Allianz SE

Assuming the 90 days horizon Richardson Electronics is expected to under-perform the Allianz SE. In addition to that, Richardson Electronics is 2.41 times more volatile than Allianz SE. It trades about -0.12 of its total potential returns per unit of risk. Allianz SE is currently generating about 0.32 per unit of volatility. If you would invest  29,490  in Allianz SE on December 24, 2024 and sell it today you would earn a total of  5,710  from holding Allianz SE or generate 19.36% return on investment over 90 days.

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

Richardson Electronics  vs.  Allianz SE

Richardson Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Richardson Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Allianz SE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz SE are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Allianz SE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Richardson Electronics and Allianz SE

The main advantage of trading using opposite Richardson Electronics and Allianz SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richardson Electronics 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 Richardson Electronics 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.