Correlation Between Talanx AG and Shanghai Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Talanx AG and Shanghai Pharmaceuticals 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 Shanghai Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talanx AG and Shanghai Pharmaceuticals Holding, you can compare the effects of market volatilities on Talanx AG and Shanghai Pharmaceuticals 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 Shanghai Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and Shanghai Pharmaceuticals.
Diversification Opportunities for Talanx AG and Shanghai Pharmaceuticals
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Talanx and Shanghai is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and Shanghai Pharmaceuticals Holdi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Pharmaceuticals 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 Shanghai Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Pharmaceuticals has no effect on the direction of Talanx AG i.e., Talanx AG and Shanghai Pharmaceuticals go up and down completely randomly.
Pair Corralation between Talanx AG and Shanghai Pharmaceuticals
Assuming the 90 days horizon Talanx AG is expected to generate 0.61 times more return on investment than Shanghai Pharmaceuticals. However, Talanx AG is 1.65 times less risky than Shanghai Pharmaceuticals. It trades about 0.36 of its potential returns per unit of risk. Shanghai Pharmaceuticals Holding is currently generating about 0.11 per unit of risk. If you would invest 7,140 in Talanx AG on August 28, 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. Shanghai Pharmaceuticals Holdi
Performance |
| Timeline |
| Talanx AG |
| Shanghai Pharmaceuticals |
Talanx AG and Shanghai Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talanx AG and Shanghai Pharmaceuticals
The main advantage of trading using opposite Talanx AG and Shanghai Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talanx AG position performs unexpectedly, Shanghai Pharmaceuticals 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 Shanghai Pharmaceuticals will offset losses from the drop in Shanghai Pharmaceuticals' 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 |
| Shanghai Pharmaceuticals vs. Westinghouse Air Brake | Shanghai Pharmaceuticals vs. GEELY AUTOMOBILE | Shanghai Pharmaceuticals vs. Fair Isaac Corp | Shanghai Pharmaceuticals vs. Commercial Vehicle Group |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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