Correlation Between PRECISION DRILLING and Allianz SE

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

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

Diversification Opportunities for PRECISION DRILLING and Allianz SE

-0.6

Correlation Coefficient

PRECISION DRILLING  Allianz SE

Excellent diversification

The 3 months correlation between PRECISION and Allianz is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding PRECISION DRILLING P and Allianz SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE and PRECISION DRILLING 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 PRECISION DRILLING P 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 PRECISION DRILLING i.e., PRECISION DRILLING and Allianz SE go up and down completely randomly.

Pair Corralation between PRECISION DRILLING and Allianz SE

Assuming the 90 days trading horizon PRECISION DRILLING P is expected to under-perform the Allianz SE. In addition to that, PRECISION DRILLING is 3.3 times more volatile than Allianz SE. It trades about -0.05 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	Weak
Accuracy	100.0%
Values	Daily Returns

PRECISION DRILLING P  vs.  Allianz SE

PRECISION DRILLING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PRECISION DRILLING P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains 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 PRECISION DRILLING and Allianz SE

The main advantage of trading using opposite PRECISION DRILLING and Allianz SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PRECISION DRILLING 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 PRECISION DRILLING P 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.