Correlation Between Guangdong Investment and Talanx AG
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Talanx AG 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 Guangdong Investment and Talanx AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangdong Investment Limited and Talanx AG, you can compare the effects of market volatilities on Guangdong Investment and Talanx AG 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 Guangdong Investment with a short position of Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Talanx AG.
Diversification Opportunities for Guangdong Investment and Talanx AG
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Guangdong and Talanx is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG and Guangdong Investment 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 Guangdong Investment Limited are associated (or correlated) with Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Talanx AG go up and down completely randomly.
Pair Corralation between Guangdong Investment and Talanx AG
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 5.09 times more return on investment than Talanx AG. However, Guangdong Investment is 5.09 times more volatile than Talanx AG. It trades about 0.07 of its potential returns per unit of risk. Talanx AG is currently generating about 0.11 per unit of risk. If you would invest 15.00 in Guangdong Investment Limited on September 12, 2024 and sell it today you would earn a total of 45.00 from holding Guangdong Investment Limited or generate 300.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. Talanx AG
Performance |
| Timeline |
| Guangdong Investment |
| Talanx AG |
Guangdong Investment and Talanx AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Talanx AG
The main advantage of trading using opposite Guangdong Investment and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, Talanx AG 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 Talanx AG will offset losses from the drop in Talanx AG's long position.| Guangdong Investment vs. United Utilities Group | Guangdong Investment vs. China Water Affairs | Guangdong Investment vs. Superior Plus Corp | Guangdong Investment vs. SIVERS SEMICONDUCTORS AB |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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