Correlation Between IND+COMMBK CHINA and ALLIANZ SE

Can any of the company-specific risk be diversified away by investing in both IND+COMMBK CHINA 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 IND+COMMBK CHINA and ALLIANZ SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INDCOMMBK CHINA ADR20 and ALLIANZ SE UNSPADR, you can compare the effects of market volatilities on IND+COMMBK CHINA 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 IND+COMMBK CHINA with a short position of ALLIANZ SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of IND+COMMBK CHINA and ALLIANZ SE.

Diversification Opportunities for IND+COMMBK CHINA and ALLIANZ SE

-0.19

Correlation Coefficient

IND+COMMBK CHINA  ALLIANZ SE

Good diversification

The 3 months correlation between IND+COMMBK and ALLIANZ is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding INDCOMMBK CHINA ADR20 and ALLIANZ SE UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLIANZ SE UNSPADR and IND+COMMBK CHINA 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 INDCOMMBK CHINA ADR20 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 UNSPADR has no effect on the direction of IND+COMMBK CHINA i.e., IND+COMMBK CHINA and ALLIANZ SE go up and down completely randomly.

Pair Corralation between IND+COMMBK CHINA and ALLIANZ SE

Assuming the 90 days trading horizon INDCOMMBK CHINA ADR20 is expected to generate 1.44 times more return on investment than ALLIANZ SE. However, IND+COMMBK CHINA is 1.44 times more volatile than ALLIANZ SE UNSPADR. It trades about 0.1 of its potential returns per unit of risk. ALLIANZ SE UNSPADR is currently generating about -0.01 per unit of risk. If you would invest  1,165  in INDCOMMBK CHINA ADR20 on April 24, 2025 and sell it today you would earn a total of  145.00  from holding INDCOMMBK CHINA ADR20 or generate 12.45% return on investment over 90 days.

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

INDCOMMBK CHINA ADR20  vs.  ALLIANZ SE UNSPADR

INDCOMMBK CHINA ADR20

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INDCOMMBK CHINA ADR20 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking signals, IND+COMMBK CHINA reported solid returns over the last few months and may actually be approaching a breakup point.

ALLIANZ SE UNSPADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALLIANZ SE UNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. 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 IND+COMMBK CHINA and ALLIANZ SE

The main advantage of trading using opposite IND+COMMBK CHINA and ALLIANZ SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IND+COMMBK CHINA 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 INDCOMMBK CHINA ADR20 and ALLIANZ SE UNSPADR 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.