Correlation Between Talanx AG and AJ LUCAS

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

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

Diversification Opportunities for Talanx AG and AJ LUCAS

-0.65

Correlation Coefficient

Talanx AG  AJ LUCAS

Excellent diversification

The 3 months correlation between Talanx and FW9 is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and AJ LUCAS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ LUCAS GROUP 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 AJ LUCAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ LUCAS GROUP has no effect on the direction of Talanx AG i.e., Talanx AG and AJ LUCAS go up and down completely randomly.

Pair Corralation between Talanx AG and AJ LUCAS

Assuming the 90 days horizon Talanx AG is expected to generate 0.12 times more return on investment than AJ LUCAS. However, Talanx AG is 8.54 times less risky than AJ LUCAS. It trades about -0.01 of its potential returns per unit of risk. AJ LUCAS GROUP is currently generating about -0.24 per unit of risk. If you would invest  8,155  in Talanx AG on October 5, 2024 and sell it today you would lose (30.00) from holding Talanx AG or give up 0.37% of portfolio value over 90 days.

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

Talanx AG  vs.  AJ LUCAS GROUP

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.

AJ LUCAS GROUP

Risk-Adjusted Performance

0 of 100

Modest

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

Pair Trading with Talanx AG and AJ LUCAS

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

The idea behind Talanx AG and AJ LUCAS GROUP 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.