Correlation Between THAI BEVERAGE and Talanx AG

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

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

Diversification Opportunities for THAI BEVERAGE and Talanx AG

0.67

Correlation Coefficient

THAI BEVERAGE  Talanx AG

Poor diversification

The 3 months correlation between THAI and Talanx is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG and THAI BEVERAGE 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 THAI BEVERAGE 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 THAI BEVERAGE i.e., THAI BEVERAGE and Talanx AG go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and Talanx AG

Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 3.58 times more return on investment than Talanx AG. However, THAI BEVERAGE is 3.58 times more volatile than Talanx AG. It trades about 0.07 of its potential returns per unit of risk. Talanx AG is currently generating about 0.08 per unit of risk. If you would invest  19.00  in THAI BEVERAGE on October 22, 2024 and sell it today you would earn a total of  17.00  from holding THAI BEVERAGE or generate 89.47% return on investment over 90 days.

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

THAI BEVERAGE  vs.  Talanx AG

THAI BEVERAGE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days THAI BEVERAGE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, THAI BEVERAGE is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Talanx AG

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Talanx AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with THAI BEVERAGE and Talanx AG

The main advantage of trading using opposite THAI BEVERAGE and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE 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 THAI BEVERAGE 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.