Correlation Between Optimum International and Allianzgi Technology

Can any of the company-specific risk be diversified away by investing in both Optimum International and Allianzgi Technology 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 Optimum International and Allianzgi Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Optimum International Fund and Allianzgi Technology Fund, you can compare the effects of market volatilities on Optimum International and Allianzgi Technology 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 Optimum International with a short position of Allianzgi Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimum International and Allianzgi Technology.

Diversification Opportunities for Optimum International and Allianzgi Technology

0.05

Correlation Coefficient

Optimum International  Allianzgi Technology

Significant diversification

The 3 months correlation between Optimum and Allianzgi is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Optimum International Fund and Allianzgi Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Technology and Optimum International 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 Optimum International Fund are associated (or correlated) with Allianzgi Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Technology has no effect on the direction of Optimum International i.e., Optimum International and Allianzgi Technology go up and down completely randomly.

Pair Corralation between Optimum International and Allianzgi Technology

Assuming the 90 days horizon Optimum International is expected to generate 5.64 times less return on investment than Allianzgi Technology. But when comparing it to its historical volatility, Optimum International Fund is 1.64 times less risky than Allianzgi Technology. It trades about 0.06 of its potential returns per unit of risk. Allianzgi Technology Fund is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  8,076  in Allianzgi Technology Fund on September 12, 2024 and sell it today you would earn a total of  1,218  from holding Allianzgi Technology Fund or generate 15.08% return on investment over 90 days.

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

Optimum International Fund  vs.  Allianzgi Technology Fund

Optimum International

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Optimum International Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Optimum International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Allianzgi Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Technology Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Allianzgi Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Optimum International and Allianzgi Technology

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

The idea behind Optimum International Fund and Allianzgi Technology Fund 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.