Correlation Between Talanx AG and HAMMONIA Schiffsholding

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

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

Diversification Opportunities for Talanx AG and HAMMONIA Schiffsholding

-0.04

Correlation Coefficient

Talanx AG  HAMMONIA Schiffsholding

Good diversification

The 3 months correlation between Talanx and HAMMONIA is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and HAMMONIA Schiffsholding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAMMONIA Schiffsholding 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 HAMMONIA Schiffsholding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAMMONIA Schiffsholding has no effect on the direction of Talanx AG i.e., Talanx AG and HAMMONIA Schiffsholding go up and down completely randomly.

Pair Corralation between Talanx AG and HAMMONIA Schiffsholding

Assuming the 90 days horizon Talanx AG is expected to generate 0.56 times more return on investment than HAMMONIA Schiffsholding. However, Talanx AG is 1.78 times less risky than HAMMONIA Schiffsholding. It trades about 0.3 of its potential returns per unit of risk. HAMMONIA Schiffsholding AG is currently generating about 0.01 per unit of risk. If you would invest  7,115  in Talanx AG on October 6, 2024 and sell it today you would earn a total of  1,180  from holding Talanx AG or generate 16.58% 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.  HAMMONIA Schiffsholding AG

Talanx AG

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 14 (%) 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.

HAMMONIA Schiffsholding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HAMMONIA Schiffsholding AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, HAMMONIA Schiffsholding is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Talanx AG and HAMMONIA Schiffsholding

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

The idea behind Talanx AG and HAMMONIA Schiffsholding AG 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..