Correlation Between Talanx AG and LIFENET INSURANCE

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

By analyzing existing cross correlation between Talanx AG and LIFENET INSURANCE CO, you can compare the effects of market volatilities on Talanx AG and LIFENET INSURANCE 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 LIFENET INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and LIFENET INSURANCE.

Diversification Opportunities for Talanx AG and LIFENET INSURANCE

-0.36

Correlation Coefficient

Talanx AG  LIFENET INSURANCE

Very good diversification

The 3 months correlation between Talanx and LIFENET is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and LIFENET INSURANCE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFENET INSURANCE 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 LIFENET INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFENET INSURANCE has no effect on the direction of Talanx AG i.e., Talanx AG and LIFENET INSURANCE go up and down completely randomly.

Pair Corralation between Talanx AG and LIFENET INSURANCE

Assuming the 90 days trading horizon Talanx AG is expected to generate 0.7 times more return on investment than LIFENET INSURANCE. However, Talanx AG is 1.44 times less risky than LIFENET INSURANCE. It trades about 0.16 of its potential returns per unit of risk. LIFENET INSURANCE CO is currently generating about 0.0 per unit of risk. If you would invest  7,165  in Talanx AG on October 24, 2024 and sell it today you would earn a total of  1,005  from holding Talanx AG or generate 14.03% return on investment over 90 days.

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

Talanx AG  vs.  LIFENET INSURANCE CO

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. In spite of rather uncertain basic indicators, Talanx AG exhibited solid returns over the last few months and may actually be approaching a breakup point.

LIFENET INSURANCE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LIFENET INSURANCE CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, LIFENET INSURANCE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Talanx AG and LIFENET INSURANCE

The main advantage of trading using opposite Talanx AG and LIFENET INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talanx AG position performs unexpectedly, LIFENET INSURANCE 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 LIFENET INSURANCE will offset losses from the drop in LIFENET INSURANCE's long position.

The idea behind Talanx AG and LIFENET INSURANCE CO 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.