Correlation Between Talanx AG and GuocoLand

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

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

Diversification Opportunities for Talanx AG and GuocoLand

-0.1

Correlation Coefficient

Talanx AG  GuocoLand

Good diversification

The 3 months correlation between Talanx and GuocoLand is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and GuocoLand Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GuocoLand Limited 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 GuocoLand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GuocoLand Limited has no effect on the direction of Talanx AG i.e., Talanx AG and GuocoLand go up and down completely randomly.

Pair Corralation between Talanx AG and GuocoLand

Assuming the 90 days horizon Talanx AG is expected to generate 2.82 times less return on investment than GuocoLand. In addition to that, Talanx AG is 1.82 times more volatile than GuocoLand Limited. It trades about 0.04 of its total potential returns per unit of risk. GuocoLand Limited is currently generating about 0.2 per unit of volatility. If you would invest  97.00  in GuocoLand Limited on September 4, 2024 and sell it today you would earn a total of  9.00  from holding GuocoLand Limited or generate 9.28% 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.  GuocoLand Limited

Talanx AG

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Talanx AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GuocoLand Limited

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GuocoLand Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GuocoLand may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Talanx AG and GuocoLand

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

The idea behind Talanx AG and GuocoLand Limited 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.