Correlation Between Alfa Financial and Talanx AG
Can any of the company-specific risk be diversified away by investing in both Alfa Financial 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 Alfa Financial and Talanx AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Financial Software and Talanx AG, you can compare the effects of market volatilities on Alfa Financial 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 Alfa Financial with a short position of Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Talanx AG.
Diversification Opportunities for Alfa Financial and Talanx AG
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alfa and Talanx is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG and Alfa Financial 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 Alfa Financial Software 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 Alfa Financial i.e., Alfa Financial and Talanx AG go up and down completely randomly.
Pair Corralation between Alfa Financial and Talanx AG
Assuming the 90 days trading horizon Alfa Financial Software is expected to under-perform the Talanx AG. In addition to that, Alfa Financial is 1.64 times more volatile than Talanx AG. It trades about -0.02 of its total potential returns per unit of risk. Talanx AG is currently generating about 0.26 per unit of volatility. If you would invest 7,305 in Talanx AG on October 7, 2024 and sell it today you would earn a total of 990.00 from holding Talanx AG or generate 13.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Alfa Financial Software vs. Talanx AG
Performance |
Timeline |
Alfa Financial Software |
Talanx AG |
Alfa Financial and Talanx AG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alfa Financial and Talanx AG
The main advantage of trading using opposite Alfa Financial and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial 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.Alfa Financial vs. LPKF Laser Electronics | Alfa Financial vs. STEEL DYNAMICS | Alfa Financial vs. Renesas Electronics | Alfa Financial vs. CALTAGIRONE EDITORE |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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