Correlation Between Talanx AG and Meiko Electronics

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

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

Diversification Opportunities for Talanx AG and Meiko Electronics

-0.12

Correlation Coefficient

Talanx AG  Meiko Electronics

Good diversification

The 3 months correlation between Talanx and Meiko is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and Meiko Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiko Electronics 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 Meiko Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiko Electronics has no effect on the direction of Talanx AG i.e., Talanx AG and Meiko Electronics go up and down completely randomly.

Pair Corralation between Talanx AG and Meiko Electronics

Assuming the 90 days horizon Talanx AG is expected to generate 0.54 times more return on investment than Meiko Electronics. However, Talanx AG is 1.85 times less risky than Meiko Electronics. It trades about 0.11 of its potential returns per unit of risk. Meiko Electronics Co is currently generating about -0.08 per unit of risk. If you would invest  7,935  in Talanx AG on November 28, 2024 and sell it today you would earn a total of  645.00  from holding Talanx AG or generate 8.13% 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.  Meiko Electronics Co

Talanx AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Talanx AG may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Meiko Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Meiko Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Talanx AG and Meiko Electronics

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

The idea behind Talanx AG and Meiko Electronics Co 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.