Correlation Between Talanx AG and Guangdong Investment
Can any of the company-specific risk be diversified away by investing in both Talanx AG and Guangdong Investment 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 Guangdong Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talanx AG and Guangdong Investment Limited, you can compare the effects of market volatilities on Talanx AG and Guangdong Investment 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 Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and Guangdong Investment.
Diversification Opportunities for Talanx AG and Guangdong Investment
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Talanx and Guangdong is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment 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 Guangdong Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Investment has no effect on the direction of Talanx AG i.e., Talanx AG and Guangdong Investment go up and down completely randomly.
Pair Corralation between Talanx AG and Guangdong Investment
Assuming the 90 days horizon Talanx AG is expected to generate 3.04 times less return on investment than Guangdong Investment. But when comparing it to its historical volatility, Talanx AG is 5.09 times less risky than Guangdong Investment. It trades about 0.11 of its potential returns per unit of risk. Guangdong Investment Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. 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 |
Talanx AG vs. Guangdong Investment Limited
Performance |
| Timeline |
| Talanx AG |
| Guangdong Investment |
Talanx AG and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talanx AG and Guangdong Investment
The main advantage of trading using opposite Talanx AG and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talanx AG position performs unexpectedly, Guangdong Investment 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 Guangdong Investment will offset losses from the drop in Guangdong Investment's long position.| Talanx AG vs. Food Life Companies | Talanx AG vs. Tyson Foods | Talanx AG vs. Lery Seafood Group | Talanx AG vs. EEDUCATION ALBERT AB |
| Guangdong Investment vs. United Utilities Group | Guangdong Investment vs. China Water Affairs | Guangdong Investment vs. Superior Plus Corp | Guangdong Investment 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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