Correlation Between BB Biotech and Allianz SE
Can any of the company-specific risk be diversified away by investing in both BB Biotech 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 BB Biotech and Allianz SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BB Biotech AG and Allianz SE, you can compare the effects of market volatilities on BB Biotech 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 BB Biotech with a short position of Allianz SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Biotech and Allianz SE.
Diversification Opportunities for BB Biotech and Allianz SE
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BBZA and Allianz is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding BB Biotech AG and Allianz SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE and BB Biotech 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 BB Biotech AG 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 BB Biotech i.e., BB Biotech and Allianz SE go up and down completely randomly.
Pair Corralation between BB Biotech and Allianz SE
Assuming the 90 days trading horizon BB Biotech AG is expected to generate 2.22 times more return on investment than Allianz SE. However, BB Biotech is 2.22 times more volatile than Allianz SE. It trades about -0.01 of its potential returns per unit of risk. Allianz SE is currently generating about -0.07 per unit of risk. If you would invest 3,960 in BB Biotech AG on August 25, 2024 and sell it today you would lose (40.00) from holding BB Biotech AG or give up 1.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BB Biotech AG vs. Allianz SE
Performance |
| Timeline |
| BB Biotech AG |
| Allianz SE |
BB Biotech and Allianz SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BB Biotech and Allianz SE
The main advantage of trading using opposite BB Biotech and Allianz SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Biotech 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.| BB Biotech vs. CSL Limited | BB Biotech vs. Superior Plus Corp | BB Biotech vs. NMI Holdings | BB Biotech vs. Origin Agritech |
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Check out your portfolio center.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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