Correlation Between Carmat SA and Allianz SE

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

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

Diversification Opportunities for Carmat SA and Allianz SE

-0.52

Correlation Coefficient

Carmat SA  Allianz SE

Excellent diversification

The 3 months correlation between Carmat and Allianz is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Carmat SA and Allianz SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE and Carmat SA 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 Carmat SA 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 Carmat SA i.e., Carmat SA and Allianz SE go up and down completely randomly.

Pair Corralation between Carmat SA and Allianz SE

Assuming the 90 days horizon Carmat SA is expected to under-perform the Allianz SE. In addition to that, Carmat SA is 7.42 times more volatile than Allianz SE. It trades about -0.18 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  28,030  in Allianz SE on September 3, 2024 and sell it today you would earn a total of  1,170  from holding Allianz SE or generate 4.17% return on investment over 90 days.

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

Carmat SA  vs.  Allianz SE

Carmat SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Allianz SE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Allianz SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Carmat SA and Allianz SE

The main advantage of trading using opposite Carmat SA and Allianz SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carmat SA 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 Carmat SA 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.