Correlation Between Talanx AG and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both Talanx AG and Hitachi Construction 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 Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talanx AG and Hitachi Construction Machinery, you can compare the effects of market volatilities on Talanx AG and Hitachi Construction 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 Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and Hitachi Construction.
Diversification Opportunities for Talanx AG and Hitachi Construction
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Talanx and Hitachi is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction 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 Hitachi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Construction has no effect on the direction of Talanx AG i.e., Talanx AG and Hitachi Construction go up and down completely randomly.
Pair Corralation between Talanx AG and Hitachi Construction
Assuming the 90 days trading horizon Talanx AG is expected to generate 0.76 times more return on investment than Hitachi Construction. However, Talanx AG is 1.32 times less risky than Hitachi Construction. It trades about 0.14 of its potential returns per unit of risk. Hitachi Construction Machinery is currently generating about 0.09 per unit of risk. If you would invest 6,435 in Talanx AG on November 3, 2024 and sell it today you would earn a total of 1,775 from holding Talanx AG or generate 27.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Talanx AG vs. Hitachi Construction Machinery
Performance |
| Timeline |
| Talanx AG |
| Hitachi Construction |
Talanx AG and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talanx AG and Hitachi Construction
The main advantage of trading using opposite Talanx AG and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talanx AG position performs unexpectedly, Hitachi Construction 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 Hitachi Construction will offset losses from the drop in Hitachi Construction's long position.| Talanx AG vs. Kingdee International Software | Talanx AG vs. SAN MIGUEL BREWERY | Talanx AG vs. Suntory Beverage Food | Talanx AG vs. Take Two Interactive Software |
| Hitachi Construction vs. Zijin Mining Group | Hitachi Construction vs. WisdomTree Investments | Hitachi Construction vs. MAGNUM MINING EXP | Hitachi Construction vs. Perseus Mining Limited |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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