Correlation Between GRUPO CARSO and Talanx AG

Can any of the company-specific risk be diversified away by investing in both GRUPO CARSO 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 GRUPO CARSO and Talanx AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GRUPO CARSO A1 and Talanx AG, you can compare the effects of market volatilities on GRUPO CARSO 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 GRUPO CARSO with a short position of Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRUPO CARSO and Talanx AG.

Diversification Opportunities for GRUPO CARSO and Talanx AG

0.01

Correlation Coefficient

GRUPO CARSO  Talanx AG

Significant diversification

The 3 months correlation between GRUPO and Talanx is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding GRUPO CARSO A1 and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG and GRUPO CARSO 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 GRUPO CARSO A1 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 GRUPO CARSO i.e., GRUPO CARSO and Talanx AG go up and down completely randomly.

Pair Corralation between GRUPO CARSO and Talanx AG

Assuming the 90 days trading horizon GRUPO CARSO is expected to generate 9.38 times less return on investment than Talanx AG. In addition to that, GRUPO CARSO is 2.97 times more volatile than Talanx AG. It trades about 0.01 of its total potential returns per unit of risk. Talanx AG is currently generating about 0.19 per unit of volatility. If you would invest  7,125  in Talanx AG on October 25, 2024 and sell it today you would earn a total of  1,075  from holding Talanx AG or generate 15.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GRUPO CARSO A1  vs.  Talanx AG

GRUPO CARSO A1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRUPO CARSO A1 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GRUPO CARSO is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Talanx AG

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Talanx AG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GRUPO CARSO and Talanx AG

The main advantage of trading using opposite GRUPO CARSO and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GRUPO CARSO 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.

The idea behind GRUPO CARSO A1 and Talanx AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..