Correlation Between Talanx AG and CITIC

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

By analyzing existing cross correlation between Talanx AG and CITIC LTD ADR5, you can compare the effects of market volatilities on Talanx AG and CITIC 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 CITIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and CITIC.

Diversification Opportunities for Talanx AG and CITIC

-0.16

Correlation Coefficient

Talanx AG  CITIC

Good diversification

The 3 months correlation between Talanx and CITIC is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and CITIC LTD ADR5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC LTD ADR5 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 CITIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC LTD ADR5 has no effect on the direction of Talanx AG i.e., Talanx AG and CITIC go up and down completely randomly.

Pair Corralation between Talanx AG and CITIC

Assuming the 90 days horizon Talanx AG is expected to generate 0.63 times more return on investment than CITIC. However, Talanx AG is 1.59 times less risky than CITIC. It trades about 0.16 of its potential returns per unit of risk. CITIC LTD ADR5 is currently generating about -0.1 per unit of risk. If you would invest  7,160  in Talanx AG on October 5, 2024 and sell it today you would earn a total of  965.00  from holding Talanx AG or generate 13.48% 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.  CITIC LTD ADR5

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.

CITIC LTD ADR5

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIC LTD ADR5 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Talanx AG and CITIC

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

The idea behind Talanx AG and CITIC LTD ADR5 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.