Correlation Between Indutrade and Talanx AG

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

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

Diversification Opportunities for Indutrade and Talanx AG

-0.13

Correlation Coefficient

Indutrade  Talanx AG

Good diversification

The 3 months correlation between Indutrade and Talanx is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Indutrade AB and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG and Indutrade 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 Indutrade AB 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 Indutrade i.e., Indutrade and Talanx AG go up and down completely randomly.

Pair Corralation between Indutrade and Talanx AG

Assuming the 90 days horizon Indutrade AB is expected to under-perform the Talanx AG. In addition to that, Indutrade is 1.09 times more volatile than Talanx AG. It trades about -0.16 of its total potential returns per unit of risk. Talanx AG is currently generating about 0.03 per unit of volatility. If you would invest  7,830  in Talanx AG on September 2, 2024 and sell it today you would earn a total of  135.00  from holding Talanx AG or generate 1.72% return on investment over 90 days.

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

Indutrade AB  vs.  Talanx AG

Indutrade AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indutrade AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Talanx AG

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Talanx AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Indutrade and Talanx AG

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

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.