Correlation Between Talanx AG and American Lithium

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

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

Diversification Opportunities for Talanx AG and American Lithium

-0.48

Correlation Coefficient

Talanx AG  American Lithium

Very good diversification

The 3 months correlation between Talanx and American is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp 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 American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of Talanx AG i.e., Talanx AG and American Lithium go up and down completely randomly.

Pair Corralation between Talanx AG and American Lithium

Assuming the 90 days horizon Talanx AG is expected to generate 0.23 times more return on investment than American Lithium. However, Talanx AG is 4.38 times less risky than American Lithium. It trades about 0.1 of its potential returns per unit of risk. American Lithium Corp is currently generating about -0.03 per unit of risk. If you would invest  4,163  in Talanx AG on October 5, 2024 and sell it today you would earn a total of  3,962  from holding Talanx AG or generate 95.17% return on investment over 90 days.

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

Talanx AG  vs.  American Lithium Corp

Talanx AG

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Talanx AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Talanx AG reported solid returns over the last few months and may actually be approaching a breakup point.

American Lithium Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days American Lithium Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Talanx AG and American Lithium

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

The idea behind Talanx AG and American Lithium Corp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.