Correlation Between Talanx AG and China Railway
Can any of the company-specific risk be diversified away by investing in both Talanx AG and China Railway 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 Talanx AG and China Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talanx AG and China Railway Construction, you can compare the effects of market volatilities on Talanx AG and China Railway 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 Talanx AG with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and China Railway.
Diversification Opportunities for Talanx AG and China Railway
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Talanx and China is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and China Railway Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Constr and Talanx AG 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 Talanx AG are associated (or correlated) with China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Constr has no effect on the direction of Talanx AG i.e., Talanx AG and China Railway go up and down completely randomly.
Pair Corralation between Talanx AG and China Railway
Assuming the 90 days horizon Talanx AG is expected to generate 1.39 times more return on investment than China Railway. However, Talanx AG is 1.39 times more volatile than China Railway Construction. It trades about 0.33 of its potential returns per unit of risk. China Railway Construction is currently generating about -0.22 per unit of risk. If you would invest 7,140 in Talanx AG on August 29, 2024 and sell it today you would earn a total of 730.00 from holding Talanx AG or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Talanx AG vs. China Railway Construction
Performance |
| Timeline |
| Talanx AG |
| China Railway Constr |
Talanx AG and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talanx AG and China Railway
The main advantage of trading using opposite Talanx AG and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talanx AG position performs unexpectedly, China Railway 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 China Railway will offset losses from the drop in China Railway's long position.| Talanx AG vs. EAST SIDE GAMES | Talanx AG vs. Hochschild Mining plc | Talanx AG vs. National Beverage Corp | Talanx AG vs. The Boston Beer |
| China Railway vs. Superior Plus Corp | China Railway vs. NMI Holdings | China Railway vs. Origin Agritech | China Railway vs. SIVERS SEMICONDUCTORS AB |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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