Correlation Between Talanx AG and JD HEALTH

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

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

Diversification Opportunities for Talanx AG and JD HEALTH

0.14

Correlation Coefficient

Talanx AG  JD HEALTH

Average diversification

The 3 months correlation between Talanx and 8ZN is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and JD HEALTH INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD HEALTH INTL 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 JD HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD HEALTH INTL has no effect on the direction of Talanx AG i.e., Talanx AG and JD HEALTH go up and down completely randomly.

Pair Corralation between Talanx AG and JD HEALTH

Assuming the 90 days horizon Talanx AG is expected to generate 0.6 times more return on investment than JD HEALTH. However, Talanx AG is 1.68 times less risky than JD HEALTH. It trades about -0.08 of its potential returns per unit of risk. JD HEALTH INTL is currently generating about -0.21 per unit of risk. If you would invest  8,550  in Talanx AG on October 11, 2024 and sell it today you would lose (170.00) from holding Talanx AG or give up 1.99% of portfolio value over 90 days.

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

Talanx AG  vs.  JD HEALTH INTL

Talanx AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 11 (%) 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.

JD HEALTH INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD HEALTH INTL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, JD HEALTH 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 JD HEALTH

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

The idea behind Talanx AG and JD HEALTH INTL 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.